Lowe’s profit drops 10% on weak sales and stiff competition
Home improvement chain Lowe’s Cos. reported that profit dropped 10% in its fiscal second quarter because of competition and weak sales.
For the three months ended Aug. 3, the retailer reported net income of $747 million, or 64 cents a share, compared with $830 million, or 65 cents, a year earlier.
Sales sank 2%, to $14.2 billion from $14.5 billion.
“Our results fell short of our overall expectations,” said Lowe’s Chief Executive Robert A. Niblock in a Monday statement. “We fully understand that we must improve our level of execution.”
The North Carolina company said that a staff reduction at its headquarters was responsible for eating away $15 million in profit.
But analysts say a large part of its troubles have to do with a planned transformation — with permanent low prices — that has struggled to catch on with consumers while competitors such as Home Depot attract shoppers with improved customer service.
The poor results follow on the heels of Home Depot’s report last week of a 12% jump in profit. Home Depot also lifted its full-year forecast after experiencing healthy sales this year.
Shares of Lowe’s dropped $1.61, or 5.8%, to $26.26 in Monday trading.
