Lowe’s, lifted by strong economy, upgrades outlook

NEW YORK — Lowe’s third-quarter profit handily topped Wall Street’s view, thanks in part to the strong economy and sales to contractors. The home-improvement company boosted its fullyear adjusted earnings outlook.

The retailer, the nation’s second-largest home improvement chain behind Home Depot, also said it plans to reorganize its Canada operations and shut 34 underperforming stores.

Shares edged higher in midday trading while the broader markets declined.

The announcement comes a day after disappointing results from rival Home Depot, which reported its third-quarter revenue missed analysts’ estimates and cut its full-year sales forecast. Home Depot said its strategy to meld its online business and its physical stores is taking longer to deliver benefits. Shares of Home Depot took a hit.

The contrasting quarterly performances highlights the increasing competition between Home Depot and Lowe’s, which is in the process of an overhaul under its CEO Marvin Ellison.

Ellison, a one-time Home Depot executive who took the top job at Lowe’s last year, is trying to reshape the culture at Lowe’s, which had been a distant second to Home Depot in the sector for a while. Ellison has been focusing on getting Lowe’s back to the fundamentals of retailing, like making sure the right items are in stock and improving customer service.

One of the big focuses: improving its business with professional customers such as electricians and builders, who represents around 23% of Lowe’s sales. That’s key because they spend around 5.5 times more than the average do-it-yourself-customer, accord

ing to Neil Saunders, man- aging director of GlobalData Retail.

As part of that strategy, Lowe’s has been adding permanent staffing to the prodesks at its stores and set- ting aside dedicated parking spaces for pros. Lowe’s has been helping professional customers with loading supplies onto their trucks as well.

“We are trying to get to the basic expectations that customers have,” Ellison said Wednesday. “In retail, basic things really matter.”

He noted that with previous management, Lowe’s got too caught up with gim- micky innovations like 3D printing and robots.

This holiday shopping season, Lowe’s will be focusing on home improvement items like power tools as gifts.

Ellison has thinned executive positions at the Mooresville, North Carolina-based company and begun paring away weaker selling items in its stores. Lowe’s also announced last summer that it was closing the 99 Orchard Supply Hardware stores it owns in California, Florida and Oregon.

DREAMSTIME Lowe’s is working on improving its business with professional customers, who represent around 23% of Lowe’s sales.