(Bloomberg) -- Lowe’s Cos. cut its forecast for the second time this year, underscoring the shift away from big home-renovation projects after the pandemic boom.
For the full year, Lowe’s now sees same-store sales dropping 5%, worse than its prior expectation of a decline in the 2% to 4% range. The company also trimmed its profit outlook.
Lowe’s attributed the changes to few purchases on big-ticket items and a slowdown in spending on do-it-yourself projects in the third quarter ended Nov. 3. The DIY business accounts for about 75% of Lowe’s customer base. Demand from professional contractors is holding up better than that from the ordinary homeowners who account for most of Lowe’s sales.
The shares fell 2% at 9:35 a.m. in New York trading. The stock had risen 2.6% since the start of the year through Monday’s close, trailing the 18% gain for the S&P 500 Index.
Same-store sales at Lowe’s fell 7.4% in the third quarter, their fourth consecutive decline, the company said Tuesday. Analysts expected a 4.9% drop.
Rival Home Depot Inc. also reported a drop in comparable sales last week, along with narrowed guidance for the year. Both companies benefited during the pandemic when locked-down Americans took on renovations and historically low borrowing costs fueled new home purchases. Now, with elevated mortgage rates and a steep drop in home sales, Home Depot and Lowe’s are on track to report their first simultaneous declines in full-year revenue growth since fiscal 2010.
Drew Reading, an analyst at Bloomberg Intelligence, isn’t convinced that Lowe’s will be able to right the ship soon. He called projections for sales to rebound next year “optimistic” and said recent store traffic remains weak and behind that at Home Depot, which relies more on contractors and less on DIY demand.
Lowe’s forecast cut “reflects persistent weakness in discretionary DIY spending amid an increasingly challenging consumer backdrop,” Reading said.
(Updates share trading in fourth paragraph.)
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