Lowe's, the world's No.2 home improvement chain by market share, reported a better-than-expected rise in quarterly sales and forecast 2016 sales above estimates as it benefits from a steady improvement in the U.S. housing market.
The company, like bigger rival Home Depot Inc, is benefiting from a pent-up demand for houses after the 2008 financial recession, while low interest rates and growth in jobs, wage and credit have spurred spending on renovations.
Lowe's said it expects sales for the current fiscal year, which will include an extra week, to rise 6 percent, to $62.62 billion. That handily beats the 4.8 percent growth analysts on average had estimated, according to Thomson Reuters I/B/E/S.
Besides the housing market improvement, Lowe's was also helped by unseasonably warm weather in the holiday quarter that encouraged customers to continue outdoor activities and home renovations.
"We capitalized on increased demand for exterior products as a result of warmer weather, while at the same time helped customers tackle interior projects, allowing us to deliver positive comps in all product categories," Chief Executive Officer Robert Niblock said on Wednesday.
Lowe's sales at established stores rose 5.2 percent in the fourth quarter ended Jan 29. Analysts on average had expected an increase of 3.6 percent, according to research firm Consensus Metrix.
Net sales rose 5.6 percent to $13.24 billion. Analysts on average were expecting revenue of $13.07 billion, according to Thomson Reuters I/B/E/S.
Home Depot on Tuesday also reported better-than-expected sales.
Lowe's net earnings fell to $11 million, or 1 cent per share, from $450 million, or 46 cents per share, hurt by a $530 million impairment charge as it exited a joint venture in Australia.
Excluding items, the company's earned 59 cents per share, which was in line with analysts' estimates.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)