Appliances and seasonal living helped Lowe’s post a 17.4% increase in earnings for the third quarter to $404 million in a sector where consumers remain cautious of major purchasing commitments.
Earnings per dilute share increased 26.1% to 29 cents based on a total sales increase of 1.9% to $11.6 billion, a comparable store sales gain of 0.2% and cost-savings efforts. The company recognized a one-time charge in the quarter that reduced pre-tax earnings by $50 million and diluted earnings per share by 2 cents.
In a conference call, Robert Niblock, Lowe’s CEO, said that depressed home sales would continue to weigh on the home furnishings sector through the middle of next year.
Appliances and seasonal living products, including grills and patio items, are among the top performing product categories Lowe’s sells while home organization performed in-line with the larger company.
Appliances helped Lowe’s post a 1% increase in tickets above $500 in the quarter while those below $50 were flat. The number demonstrate that consumers will spend money on their homes, but they remain shy about making large commitments with the housing market still on the skids, Niblock noted.
“As we’ve seen over the past several quarters, consumers are not yet willing to consistently take on larger discretionary home improvement projects,” he said. “They remain cautious and continue to rationalize the scope of their projects or in many cases delay projects until they have better clarity about their personal financial situations, the value of their homes, and the overall macro-economic outlook. In our third quarter consumer survey, homeowners indicated that half of the home improvement projects they have planned in the next six months are discretionary in nature. However, the majority of that discretionary spend is expected to be on projects under $500.”