Lowe’s delivers strong 2nd Q
NEW YORK — Lowe’s rebounded in the second quarter after dismal weather cut into projects at home — and into company profits — to start the year. Investors also shrugged off a more guarded outlook as the home-improvement retailer shifts direction under new CEO Marvin Ellison.
After a premarket selloff, Lowe’s shares jumped nearly 8 percent Wednesday and touched a new high, underscoring the market’s faith in Ellison.
Lowe’s is preparing for a more constrained housing market, as higher mortgage rates combined with steadily rising real estate prices have dampened home sales despite the robust economy and job market. While Americans continue to invest in their homes, Lowe’s has long been a laggard to Home Depot, and Ellison plans to make it more of a destination.
The company is also closing the 99 Orchard Supply Hardware stores that it owns in California, Florida and Oregon so it can focus solely on its core home improvement business.
Ellison told The Associated Press that Lowe’s had lost its way and become more interested in things like international expansion and innovation, rather than running a basic home improvement chain. Customer traffic has long been strong, but shoppers have been left disappointed because they haven’t found what they needed, he said.
“We have a lot of opportunity,” said Ellison, who has met with suppliers and customers and visited stores across the United States.
After thinning executive positions at the company, Ellison began paring away what he sees as nonessential in the aisles of Lowe’s. That means rethinking some of the goods that it sells, getting rid of lower-selling items and focusing on the top 2,000 products that it carries.
Ellison wants sales associates at Lowe’s to engage more with shoppers, and is examining tasks that might take time away from serving customers.
Lowe’s has a great balance sheet, Ellison said, but noted that it is “going to be fiscally responsible and expense-disciplined.”
The company is shedding $500 million in planned capital projects this year not directly related to its core business, Ellison said. That money will be used for share buybacks.
For the three months ended Aug. 3, Lowe’s earned $1.52 billion, or $1.86 per share.