(Bloomberg) — Lowe’s Cos. forecast sales to rise this year, an early sign that consumers are starting to spend again after staying on the sidelines due to higher rates.
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The retailer said its comparable sales will gain as much as 1% this year, though that was slightly lower than the 1.4% average estimate among Wall Street analysts.
Mooresville, North Carolina-based Lowe’s is the latest big-box retailer to report quarterly results this earnings season, with company performance being largely been mixed so far. Macroeconomic uncertainties — ranging from tariff concerns to price-sensitive consumers — are weighing on outlooks for the year, while US consumer confidence is falling across age groups and incomes.
Still, operators are generally posting healthy fourth-quarter results. Lowe’s comparable sales turned positive and beat Wall Street expectations, reversing a slump. The company said the key metric rose partly due to a strong holiday period and online sales.
Its shares rose 4% at the open of US trading in New York. They were up 4% in the past 12 months through Tuesday, trailing a 17% gain for the S&P 500 Index.
Lowe’s and other home improvement retailers have been seeking to ignite sales growth after the pandemic-fueled boom dissipated due to high interest rates. Consumers have been holding off buying or remodeling homes, waiting for the cost of borrowing to get cheaper.
“Even though short term interest rates have started to come down, this remains a challenging home improvement market,” Chief Executive Officer Marvin Ellison said on a call with analysts Wednesday. Mortgage rates remain high, creating a “lock in” effect among homeowners who aren’t trading homes, while consumers remain cautious about discretionary purchases.
Still, longer-term sector dynamics haven’t changed, as more people work from home and millennials form families, which boosts spending on home improvement. Ellison also expects some consumers to tap into equity in their properties to fund big remodel projects.
Lowe’s is seeking to grow its business catering to home-improvement professionals who tend to work on bigger, more complex projects. So-called pro customers are generally outperforming do-it-yourself consumers, and rival Home Depot Inc. is also targeting this area.
