Online investments, staff pay weigh on Lowe's holiday-quarter profit view

(Reuters) - Lowe's Cos Inc forecast holiday-quarter earnings below analysts' estimates on Wednesday, as the company invests heavily in online business and benefits for employees working through the COVID-19 pandemic.

Reuters November 19, 2020 00:07:28 IST
Online investments, staff pay weigh on Lowe's holiday-quarter profit view

Online investments staff pay weigh on Lowes holidayquarter profit view

(Reuters) - Lowe's Cos Inc forecast holiday-quarter earnings below analysts' estimates on Wednesday, as the company invests heavily in online business and benefits for employees working through the COVID-19 pandemic.

The home improvement chain's shares, which have jumped over 33% this year on swelling sales of tools and building materials from people upgrading their homes, fell 5%.

To support the rush, Lowe's has been putting money into upgrading supply chains to get in-demand products on shelves faster, and adding new online shopping features to better compete with larger rival Home Depot Inc.

Lowe's spending on staff compensation has also risen significantly. It has already paid more than $800 million in COVID-19 related benefits, and is evaluating more financial assistance for employees in the fourth quarter.

It said it will also spend about $75 million on additional safety and cleaning measures at its nearly 2,000 stores.

Home Depot on Tuesday said it would boost employees' wages by about $1 billion annually.

With the added expenses, Lowe's expects earnings of $1.10 to $1.20 per share in the fourth quarter, compared with analysts' estimates of $1.17 per share, according to IBES data from Refinitiv.

Chief Executive Officer Marvin Ellison said Lowe's was "not really concerned about the short term" and was making investments in its supply chain, product assortments and new store layouts to boost productivity for the years ahead.

Lowe's also said it expects to repurchase about $3 billion of stock in the holiday quarter.

Same-stores sales for the quarter are expected to rise about 15% to 20%, ahead of analysts' expectation of a 9.6% increase, which indicates slower growth compared to the 30.1% surge in the third quarter.

Excluding items, the company earned $1.98 per share, slightly below estimates of $1.99 per share in the reported quarter.

(Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.