Lowe’s Earnings: DIY Customers Reduce Sales, but Long-Term Outlook Remains Unchanged

Wide-moat Lowe’s felt the effects of weakened consumer spending in its second-quarter results, reporting a same-store sales decline of 5.1% and total revenue drop of 5.5%. Like wide-moat Home Depot, reduced spending on big ticket projects and unfavorable weather conditions weighed on performance, as evidenced by a decline of 6.5% in purchases over $500. But there were bright spots in both the professional business, where comparable sales increased at a mid-single-digit rate, and online sales, which grew 2.9%. More positively, productivity improvements buffered some cost pressures, with Lowe’s delivering an adjusted operating margin of 14.4%, which was down about 115 basis points from last year but was 35 basis points better than it had anticipated.