Lowe’s (LOW) reported Wednesday a second-quarter profit that surged 26% to beat the Street, as a strengthening housing market helped the home-improvement retailer log its best same-store sales growth in nine years.
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The Mooresville, N.C.-based company also raised its full-year outlook, now calling for per-share earnings of $2.10, sales growth of 5% and same-store sales growth of 4.5%. Lowe’s previously expected per-share earnings of $2.05 on sales growth of 4% and same-store sales growth of 3.5%.
Shares leapt 4.5% to $46.05 in pre-market trading. As of Tuesday’s close, the stock has risen 58% over the last 12 months.
For the second quarter, Lowe’s recorded a $941 million profit compared to a year-ago profit of $747 million. On a per-share basis, earnings checked in at 88 cents versus 64 cents, topping consensus estimates of 79 cents.
The year-ago quarter included a penny charge from staff reductions at Lowe’s headquarters and a three-cent charge related to a calendar shift.
Net sales jumped 10% to $15.71 billion. Analysts projected revenue of $15.07 billion.
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Gross margin widened to 34.4% from 33.9%.
Like Home Depot (HD), Lowe’s has been buoyed by an uptick in home construction and new home sales. But Lowe’s has lagged behind its rival, which on Tuesday reported 17% earnings growth as customers spent more per ticket, and has undertaken an effort to rework its product lines and stores to better compete.
And in the latest period, Lowe’s saw its same-store sales rise 9.6% versus a 0.7% decline year-over-year in the first quarter. Home Depot recorded comparable store sales growth of 10.7%, its best since 2000.
“Home improvement demand was strong during the quarter, and we capitalized on it with improving execution,” Lowe’s Chairman and Chief Executive Robert Niblock said in a statement. “We drove a healthy balance of ticket and transaction growth, and delivered solid performance across all product categories.”
Last week, Lowe’s said it remained the lone bidder for Orchard Supply Hardware, a Sears Holdings (SHLD) spinoff that filed for Chapter 11 protection. Lowe’s offered $205 million in cash, plus the assumption of debt, for the West Coast hardware chain. The deal will give Lowe’s a larger footprint in California, a market that the company has described as underpenetrated.