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Business

Lowe's Profit Rises, But CEO Cites 'Disruptions' After Layoffs

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Second-quarter profits rose at home improvement retailer Lowe's, but not as much as Wall Street analysts were expecting.

Revenues at the Mooresville-based company rose 6.7 percent, boosted by sales of home appliances and lawn and garden supplies and sales to contractors.

Year-over-year sales at Lowe's stores, known as comps, were up. But CEO Robert Niblock told analysts Wednesday that recent changes in the way Lowe's staffs its stores held back growth.

“In the second quarter, comp growth was constrained as a result of disruption caused by changes to our store staffing model earlier in the year, which became more apparent with increased traffic,” Niblock said. 

In January, the company laid off 2,400 assistant store managers, and replaced them with a smaller number of staff on sales floors. That was supposed to better serve customers seeking help.

In a report out Wednesday, the Mooresville-based company said it earned $1.42 billion, or $1.68 per share, in the quarter that ended Aug. 4.  That was up from $1.17 billion, or $1.31 a share a year ago.

After adjustments for one-time items, including a $96 million gain on the sale of Lowe's interest in an Australian joint-venture, earnings per share were $1.57. That was a nickel short of the average estimate of analysts surveyed by Zack's Investment Research.

Niblock also said Lowe's online sales were up, by 43 percent, over a year ago. He said the company would continue investing in ways to reach customers "whenever, wherever and however they choose."

Lowe’s also lowered its profit prediction for the full year, to between $4.20 and $4.30 per share. Previously, it has predicted $4.30. The company still expects sales to be up 5 percent for the full year.

Lowe’s shares were down about 6 percent at mid-morning.

RELATED LINKS

Aug. 23, 2017, Lowe's press release on 2nd quarter earnings