Shares of Lowe's cratered early Wednesday to the tune of 6% as the home-improvement retailer reported third-quarter earnings of 88 cents a share, badly missing Wall Street estimates for 96 cents. Net sales rose 9.6% from the prior year to $15.7 billion, trailing projections for $15.8 billion. Lowe's slashed its full-year earnings outlook to $3.52 a share from a previous $4.06.
"Our third-quarter operating results were below our expectations due to slower sales in the first two months of the quarter. While we expected moderation in the second half of the year, traffic slowed more than we anticipated in August and September before improving in October, which put pressure on our profitability in the quarter," said Lowe's Chairman and CEO Robert Niblock in a statement.
The tone among Home Depot executives on Tuesday was markedly different than Lowe's, suggesting the world's largest home-improvement retailer is the dominant force fueling the continued strength in the U.S. home remodeling market. Wall Street seems to agree that Home Depot is out-executing its smaller rival and may continue to do so in 2017: shares of Home Depot have fallen about 5.9% so far this year compared to a drop of more than 10% for Lowe's.
Home Depot's third-quarter earnings coming in at $1.60 a share, beating analysts' forecasts of $1.58. Net sales rose 6.1% to $23.2 billion, ahead of estimates for $23 billion. U.S. same-store sales rose a solid 5.9% from the prior year.