Lowe's (LOW) Q2 Earnings & Sales Beat Estimates, Rise Y/Y - Yahoo Finance

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Lowe’s Companies, Inc. LOW reported robust second-quarter fiscal 2020 results, wherein both earnings and sales outpaced the Zacks Consensus Estimate and grew year over year. Notably, the company delivered the fifth-straight earnings beat and the second-consecutive sales surprise.

Results benefited from the company’s retail-fundamentals strategy with improved technology and operational channels, which aided it to meet consumer demand. Notably, the consumer focus on the home, core-repair and maintenance activities fueled sales. The company saw comparable-sales growth of over 20% across all its merchandising divisions, while all the U.S. geographic regions posted comparable-sales increase of at least 30% in the fiscal second quarter. Moving ahead, momentum in sales continued in August.

Furthermore, management has been making investments in omni-channel capabilities to drive growth. Apparently, sales at lowes.com increased 135% in fiscal second quarter. On May 20, management withdrew the guidance for fiscal 2020 due to the lack of visibility about future trends, owing to the coronavirus outbreak.

 

Notably, shares of the home-improvement retailer rose nearly 2.5% in the pre-market session, following the robust quarterly results. Over the past three months, this Zacks Rank #3 (Hold) stock gained 35.1% compared with the industry’s growth of 24.3%.

Q2 in Detail

Adjusted earnings of $3.75 per share surpassed the Zacks Consensus Estimate of $3.03 and surged a whopping 74.4% year over year.

Net sales of $27,302 million jumped 30.1% year over year and surpassed the Zacks Consensus Estimate of $24,708 million. Notably, comparable sales increased 34.2% during the quarter under review. Comparable sales for the U.S. home-improvement business reflected a robust rise of 35.1% in the quarter, following an increase of 12.3% in the preceding quarter.

Lowes Companies, Inc. Price, Consensus and EPS Surprise

Lowes Companies, Inc. Price, Consensus and EPS Surprise

Lowes Companies, Inc. price-consensus-eps-surprise-chart | Lowes Companies, Inc. Quote

Gross profit improved nearly 38% year over year to $9,304 million, while gross margin expanded 197 basis points to 34.1%, driven by strong top-line growth.

Other Financial Aspects

In the reported quarter, Lowe’s invested $460 million to support the frontline hourly associates, communities and store safety. During the first half of fiscal 2020, Lowe's spent $560 million to financially support its associates amid the pandemic, and $100 million as community pandemic relief. Moreover, its second-quarter performance led to a record quarterly Winning Together profit-sharing bonus for the company’s hourly associates at 100% of its outlets, worth $107 million.

Moreover, the company ended the quarter with cash and cash equivalents of $11,641 million, long-term debt (excluding current maturities) of $20,197 million and shareholders’ equity of $4,356 million. It generated cash flow from operations of $11,752 million as of Jul 31, 2020.

During the first six months of fiscal 2020, Lowe’s repurchased shares worth $966 million and distributed $836 million as dividends. It had earlier suspended the share-repurchase program for the rest of fiscal 2020.

As of Jul 31, 2020, the company operated 1,968 home-improvement and hardware stores across the United States and Canada.

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Lowe's (LOW) Q2 Earnings & Sales Beat Estimates, Rise Y/Y - Yahoo Finance
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