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Lowe turnaround takes a hit with dull fourth quarter



Marvin Ellison's honeymoon in Lowe's, California is about to end. Investors have increased their shares since taking office as chief executive in July, but a gloomy fourth quarter could change that.

Fourth-quarter revenue was little changed, at $ 15.6 billion, from the $ 15.7 billion estimate. A 1.7% gain in same store sales also missed expectations.

Key ideas

– Bad weather, including a historic cold snap, may have played a role in poor performance. Home Depot Inc., which disappointed investors Tuesday with its results, said the snow, cold and rain in the last quarter had reduced the growth in same-store sales by 1 point.

-Lowe's and Home Depot are often viewed as approximations of confidence in the US housing market. When homeowners think prices will continue to rise, they are spending more. Values ​​have risen steadily since the recession, but have been weak recently, raising concerns about the future growth of home renovation chains.

-The company also exposed its sales forecast for the current fiscal year, indicating that revenue would increase by 2% and diluted earnings per share would be between $ 6 and $ 6.10.

-Ellison, a former Home Depot executive, joined Lowe's in July and was busy reorganizing management and operations while closing stores. Investors were satisfied with the title, which has gained about 9% since his arrival. They will know much more in the coming months, as the company enters the busiest sales season.

Market reaction

-Lowe's shares gained 14% this year until the close of Tuesday.


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