(Bloomberg) -- Lowe’s Cos. lowered its full-year guidance as the frozen housing market keeps consumers on the sidelines for big purchases and renovations, including do-it-yourself projects.
The retailer now expects comparable sales to fall 3.5 to four per cent, versus the previous forecast of a two to three per cent decline. That is worse than the average analyst estimate compiled by Bloomberg. Lowe’s also expects adjusted earnings to come in lighter than it previously forecast.
Lowe’s said it cut its forecast because consumers were spending less than expected on do-it-yourself projects as the macroeconomic environment remains challenging. The company added that it continues to make inroads with professional customers and that it’s working to take share when the market rebounds.
Americans have pulled back on discretionary spending amid high interest rates and inflation. They are holding off on making large purchases or taking on construction projects that need financing, prioritizing food and other essentials. When they are shopping, consumers are being selective and seeking value.
That’s translated into mixed results for retailers, favoring companies that sell necessities. Walmart Inc. raised its guidance as shoppers prioritize items like groceries, and the company said it’s not seeing any fraying of consumers’ financial health. Target Corp. reports quarterly results Wednesday.
Within the home-improvement arena, Lowe’s and other operators have been navigating through a slowdown following the pandemic when consumers rushed to upgrade houses. Existing home sales remain muted, and consumers are focusing on smaller projects such as gardens.
Lowe’s, which runs more than 1,700 stores, said comparable sales declined 5.1 per cent during the latest quarter through early August. That is lower than what Wall Street analysts were estimating. Adjusted earnings came in at US$4.10, higher than analysts’ forecast.
Rival Home Depot Inc. cut its full-year guidance last week, citing a “deferral mindset” as consumers wait for interest rates to decline. Floor & Decor Holdings Inc. reduced the number of store openings for the year, as well as its sales and earnings forecast. The retailer said in August that a reduction in interest rates is necessary to improve demand.
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