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Lowe’s earnings beat estimates, but same-store sales fall

Yahoo Finance Live anchors discuss second-quarter earnings for Lowe’s.

Video transcript

BRAD SMITH: Let's talk about another retailer that reported this morning as well, Lowe's. Shares this morning of Lowe's and the hardware store-- I guess hardware retailer.

BRIAN SOZZI: They're a hardware store.

BRAD SMITH: Yeah.

BRIAN SOZZI: They sell nails.

BRAD SMITH: It's up by about 6/10 of a percent. Topping those bottom line earnings estimates, but the home improvement company had a big miss on same-store sales, reporting a 0.3% loss for the quarter here. We were taking a look at shares there a moment ago here for Lowe's. I mean--

BRIAN SOZZI: Eh.

BRAD SMITH: Yeah. It's an eh, pretty much.

BRIAN SOZZI: I think Home Depot, it's-- I think Home Depot, in relation to Lowe's, just had a better quarter. Better performance in the pro-business. I know Lowe's called out strength in sales of pro-goods, that essentially contractors coming to their stores buying concrete, buying nails, you name it, for the job sites. Those sales up 13%, pretty good.

And I'll add this to, again, another retailer warning-- or just pointing out high levels of inventory. Inventory for Lowe's up 11 and a 1/2% in the most recent quarter.

BRAD SMITH: [INAUDIBLE]

BRIAN SOZZI: Maybe you thinking, well, it's not as much as the increases we saw at Walmart and Target. I mean, Target's inventory was up 38%. But Lowe's same-store sales in the US were only up 2/10 of a percent. So that inventory increase is a red flag also for Lowe's.

Also Lowe's coming out here, I would say, sharpening their outlook. So they're looking for same-store sales for this year to decline 1%, to increase 1%. So not exactly a fab outlook from Lowe's.

BRAD SMITH: Yeah, it's-- I mean, it's toss up at that point for the comp sales range that they had provided there. But the DIY side was something that caught my attention here. They said that sales were impacted by the shortened spring and lower demand in certain discretionary categories for Lowe's, partially offset by this 13% increase in pro-customer sales.

So really strong or really bullish or pro-pro, if you will, over at Lowe's right now. But it's really the weakness on that individual consumer, the DIYers, the weekend warriors within the home, I suppose, that are looking at a lot of the projects.

And again, for Lowe's and Home Depot, we were talking about it yesterday, how much they are expected to lean into some of the more seasonal trends, the cyclicality of the people who are gonna get outdoors and either decorate the house for perhaps some of the holidays coming up or even thereafter. As you start to think about these companies and the compression that we've seen in their expectations, you start to think out to next year and when it's gonna start to rebound.

And that's when for a company in Lowe's or Home Depot, they start to reply on that-- rely on that spring season rolling around and strong growth in perhaps some of the categories that are outside the home, instead of the DIY projects inside.

BRIAN SOZZI: You just reminded me some of the worst weekends in my life where as a kid walking around Home Depot with my dad-- or being dragged Home Depot with my dad for lime. He would always buy lime for the lawn.

BRAD SMITH: Lime?

BRIAN SOZZI: Just a terrible chemical. But anyways--