Lowe’s Q4 profit miss overshadows sales increase

NEW YOR K • Lowe’s recorded falling profits in the fourth quarter despite a redhot housing market.

Shares slid 8 per cent in morning trading as healthy same- store sales were overshadowed by the profit miss and lower overall revenue.

The Mooresville, North Carolina, company on Wednesday reported a 16.4 per cent drop in earnings to US$ 554 million, or 67 cents per share. Earnings, adjusted for non-recurring costs, came to 74 cents per share, which is still 14 cents short of Wall Street expectations.

Revenue fell 1.8 per cent to US$ 15.49 billion, which edged out expectations. Same-store sales, usually considered a measure of a retailer’s health, rose 3.7 per cent for the U. S. home improvement business.

“Given the favourable dynamics in the market, we would have expected a moderately better performance,”

HAMPERED BY THE SHADOW HOME DEPOT CASTS OVER THE SECTOR.

said Neil Saunders, managing director of GlobalData Retail. “However, in our view, Lowe’s ability to capitalize on key trends and dynamics is hampered by the shadow Home Depot casts over the sector.”

Last week, Home Depot Inc. reported a 5.6 per cent surge in profit and rising revenue.

Both Lowe’s and Home Depot are heading i nto their busy spring seasons in a healthy housing market, though there is concern of a slowdown.

Mortgage rates have been creeping higher, hitting their highest level in four years during the most recent report a week ago. That, coupled with rising home prices, could hamper what has been a persistently strong housing market.

For the full year, Lowe’s reported profit of US$ 4.09 per share, or per cent4.39 per share excluding certain costs, on revenue of US$68.62 billion.

Looking ahead, the company expects its fiscal 2018 profit to range from US$5.40 to US$5.50 per share and revenue to rise 4 per cent. Samestore sales are forecast to increase 3.5 per cent..