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Lowe's Stock Slides On Muted 2022 Profit Outlook, Fading Home DIY Demand

Lowe's stock hit the skids Wednesday after a muted 2022 profit outlook that could signal slowing home improvement demand.

Lowe's Companies  (LOW) - Get Lowe's Companies, Inc. Report shares slumped lower Wednesday after the retailer issued a muted 2022 profit outlook that could signal slowing home improvement demand.

Lowe's reiterated its 2021 sales forecast of $95 billion, which it published last month, while noting that next year's revenue tally should come in between $94 billion and $97 billion, even while adding an extra week owing to 2022 calendar specifics, driving a bottom line of $12.25 to $13 per share as gross profit margins remain largely flat to 2021. 

Comparable sales, Lowe's said, could fall by as much as 3%, or, at best, be flat to last year. Lowe's did soften the outlook with plans to buyback another $13 billion in shares next year, but investors will likely focus on the stark differences between it and the robust pace of sales growth at larger rival Home Depot  (HD) - Get Home Depot, Inc. Report.

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"We are confident in the long-term growth prospects for the Home Improvement market, and that we are making the right investments to continue winning with both our Pro and DIY customers," said CEO Marvin Ellison. "We also remain committed to driving sustainable shareholder value creation through a disciplined and highly effective capital allocation strategy."  

Lowe's shares were marked 3.5% lower in pre-market trading Wednesday to indicate an opening bell price of $243.80 each. 

Last month, Home Depot posted stronger-than-expected third quarter earnings of $3.92 per share, up 23.2% from the same period last year, on sales of $36.8 billion.

Same store sales were up 6.1% from last year, Home Depot said, while comparable sales in the U.S. were up 5.5%, a figure that also topped Street forecasts. Average tickets rose 12.9% to $82.38 per trip, helping the overall revenue increase even amid the recent surge in consumer price inflation.