Things in the home improvement industry seem to be on the up and up.
More than half of American homeowners — 53% — agree that now is a good time to renovate a home, a statistic mirrored by recent sales increases at Lowe’s, the nation’s second largest retail home improvement chain.
Lowe’s recently reported same-store sales which were far higher than what analysts initially estimated. For example, Lowe’s shares rose 2.5% premarket while the company also forecasted year-round sales above initial predictions.
The company forecast included full-year earnings of about $3.29 a share, surpassing the average analyst estimate by just one cent.
“Macroeconomic fundamentals are aligned for modestly stronger home improvement industry growth in 2015,” Chief Executive Robert Niblock said on Wednesday.
So, why now? It seems that both consumers and corporations are finally getting a break. The winning combination of low gas prices and a stabilized, constantly improving job market has left Americans with a little more financial wiggle room, encouraging and giving them the means to spend more on home remodeling projects.
Lowe’s isn’t the only retail giant licking their fingers, however. Consumer confidence and increased spending on home renovations has also naturally benefited Lowe’s rival Home Depot, who also reported better-than-expected sales and profits earlier this week.
However, Lowe’s isn’t far behind. The retail giant said its expecting same-store sales to jump 4-4.5% in the business year ending January 2016 while total sales are expected to rise between 4.5% and 5%. In terms of dollar amounts, the forecast translates to big bucks — sales of $58.75-$59.04 billion, which exceeds the average analyst estimate of $58.52 billion, according to Thomson Reuters I/B/E/S.
During the fourth quarter, Lowe’s same-store sales jumped by 7.4%, higher than the original 5.1% predicted by analysts, according to research firm Consensus Metrix. Net incomes also spiked to $450 million, or 46 cents a share, in the fourth quarter which ended January 30. During the previous year, net income sat at $306 million or 29 cents per share.
In addition, net sales jumped to $12.54 billion from $11.66 billion.
While Lowe’s and Home Depot are always neck and neck, it seems that Lowe’s may have won the battle — not the war — for now by boasting a 58% gain in stock, which outperformed their rival’s increase of 50%.
