NEW YORK (AP) — Home-improvement retailer Lowe’s posted a profit Wednesday that didn’t impress Wall Street, results that came in stark contrast to those of its rival Home Depot.
Lowe’s shares slumped after reporting its profit fell 32 percent to $602 million, or 70 cents per share in the quarter that ended May 5. Adjusted earnings came to $1.03 per share, 4 cents shy of per-share projections from industry analysts, according to a poll by Zacks Investment Research.
Its sales rose nearly 11 percent to $16.86 billion, below Wall Street projections of $17.04 billion. Sales at established stores, a key measure of health for retailers, rose 2 percent, short of analyst expectations of 3.1 percent, according to a survey by the data company FactSet.
One analyst suggested those figures were not as bad as they appeared because of Lowe’s strong established-store performance in the same quarter last year.
But the numbers looked lackluster relative to the numbers Home Depot put up for the quarter. Home Depot, which reported its results last week, topped expectations for profit and revenue and it raised its profit outlook for the year.
Home Depot has the edge with customers undertaking bigger, more challenging home-improvement projects, said Neil Saunders of GlobalData Retail.
“To be fair, Lowe’s is not completely deficient in these areas, but it does play second-fiddle to its bigger rival,” he said.
Lowe’s said it was encouraged by sales to professional contractors and more serious home improvement customers and will continue to target those markets, one of Home Depot’ strengths.
Saunders acknowledged the company’s gains in that area, adding that Lowe’s “does need to work harder to become a destination for the semi-professional serious home improver.”
Recent economic data showed that Americans are spending a lot of money at places like hardware stores even as they cut down on budgets for clothing and other items. Home Depot’s sales at stores open at least a year jumped 5.5 percent worldwide, and 6 percent in the U.S in the three months ended April 30.
Despite a comparable number of North American stores — around 2,200 — Lowe’s revenue for 2016 was about $65 billion, while Home Depot’s came in close to $95 billion.
Lowe’s Cos., based in Mooresville, North Carolina, expects full-year earnings to be $4.30 per share, which is actually better than Wall Street expects.
Its stock was down $2.43, or 3 percent, at $79.91 in afternoon trading Wednesday.