Despite reporting a fourth-quarter earnings beat Tuesday morning, retail giant Lowe's (LOW) saw its comparable sales decline 6.2% year-over-year in the quarter. Lowe's cited a slowdown in home renovation projects as a result of the elevated interest rate environment, impacting sales and consumers' home improvement projects.
Yahoo Finance Reporter Madison Mills breaks down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
SEANA SMITH: Let's get to today's stock to watch and that is shares of Lowe's are under pressure this morning off just about 1.5% reported comp sales, that fell just over 6% from a year ago. The home improvement company also expecting a further slowdown ahead. Yahoo Finance's Madison Mills on the floor of the New York Stock Exchange with the latest on some of the pressure that we're seeing across the board, Maddie.
MADISON MILLS: Yeah. Seana, this is another interesting name to watch when it comes to two separate things that are weighing on a lot of different aspects of the earnings season this cycle. One of them being the higher for longer mentality for the Fed and the other being the bifurcation we're seeing in the consumer.
So just to run through how we're seeing both of those dynamics playing out in Lowe's in particular, as you mentioned sales falling underneath estimates from this earnings cycle. And this comes after the CEO had already cut their yearly forecast back in November, stating that the pullback in consumer spending on those optional home renovations projects was a lot higher than they had originally anticipated.
Now what that signals to me is that a higher for longer environment is not going to be good for a name like Lowe's. The people who were stuck in their lower mortgages, lucky for them. We're looking around seeing how they could instigate some home renovation projects throughout the pandemic when they were more likely to be working from home.
Now they're buckling potentially under the weight of stickier inflation and they're not as interested in spending on those optional home renovation projects. We got a clue about this from home depot as well last week who indicated a similar situation with their customer base. Now moving forward, I'm curious to see how Lowe's is going to plan to strategize around that consumer.
We heard from a Macy's today for example, leaning in on those more expensive names and products like a blue mercury as opposed to Macy's itself. They'll be closing some of those stores. How will Lowe's strategize to meet the consumer that can withstand the weight of inflation while those who are struggling a little bit are starting to pull back on their spending.
BRAD SMITH: All right. Maddie great synopsis there. We'll check back in a little bit closer to the opening bell.
