Lowe’s CEO says he saw customers “switch” in fiscal third quarter

Lowe’s Companies Inc (NYSE: LOW) on Wednesday reported better-than-expected results for its third fiscal quarter as demand for home improvements remained despite fears of an economic slowdown. The shares are up 5.0% this morning.

Highlights from the CEO’s interview with CNBC

The dividend share is also up because Lowe’s raised its full year guidance.

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It now forecasts sales of $97 billion to $98 billion on adjusted earnings per share of $13.65 to $13.80. By comparison, analysts had called for $96.9 billion and $13.53, respectively. On CNBC “Scream Box”CEO Marvin Ellison said:

The average American home is about 40 years old, and as homes age there are things that need fixing. Two-thirds of what we sell is non-discretionary. If your roof is leaking or an appliance fails, you can’t choose to ignore it.

Lowe’s recently launched an expensive Maytag washer to deal with pet hair and the high demand for this pricey product, the chief executive added, is testament that the consumer does not compromise.

Although economic conditions are difficult, we still have approximately $1.20 trillion in excess savings compared to before the pandemic. You hear that people are trading down; that does not happen in our space. Overall, we see customers interacting.

Lowe’s Companies Inc had a strong Halloween and Christmas trends also held up, he added.

Key Takeaways from Lowe’s Third Quarter Earnings Report

Won $154 million vs $1.896 billion a year ago
Earnings per share also fell $2.73 to 25 cents
Adjusted for a charge of $2.1 billion, EPS was $3.27
Sales increased 3.0% year over year to $23.5 billion
The consensus was $3.09 per share on $23.1 billion in sales

Same-store sales jumped 3.0% this quarter — well above expectations, according to the results press release. According to CEO Ellison:

In the third quarter, we saw DIY customers return. We actually had the best DIY performance of the year in the third quarter. Thus, we see customers exchanging for innovation. We see customers trading even for discretionary items.

A day earlier, Home Depot peers also reported positive results for its last financial quarter.