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Lowe’s shares tumble as earnings fall short despite robust sales gains

The results from Lowe’s come one day after Home Depot reported third-quarter earnings that beat estimates.

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A shopper visits a Lowe’s hardware store in Philadelphia, Pennsylvania, November 4, 2020.

Mark Makela | Reuters

Lowe’s shares fell Wednesday after the home improvement retailer reported third-quarter earnings and a profit outlook slightly short of estimates, weighed down by higher labor costs and investments in its e-commerce business.

Its same-store sales surged more than 30%, including a doubling of online sales, as the coronavirus pandemic pushed more people to its stores and website to invest in their homes.

But investors largely shrugged off those gains, looking more toward the future and how the retailer will perform after the Covid-19 crisis abates.

“What’s next? I think that’s what the market is really starting to ask here,” Oppenheimer analyst Brian Nagel said. “The market is worried about … how these companies perform against these very difficult comparisons.”

Lowe’s shares were down around 4% in early trading.

Here’s how the home improvement company did during its fiscal third quarter compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: $1.98, adjusted, vs. $1.99 expected
  • Revenue: $22.31 billion vs. $21.25 billion expected

For the quarter ended Oct. 30, net income fell to $692 million, or 91 cents a share, from $1.05 billion, or $1.36 per share, a year earlier. Excluding a $1.1 billion pretax loss on extinguishment of debt, the company earned $1.98 per share, a penny short of analysts’ estimates, based on Refinitiv data.

Sales rose to $22.31 billion from $17.39 billion a year earlier, beating expectations for $21.25 billion.

Same-store sales, which track sales online and at Lowe’s stores open for at least 12 months, surged 30.1%, topping estimates for 22.8% growth. Online sales rose 106%.

Sales in all of Lowe’s merchandising departments rose over 15%, while all regions’ sales climbed more than 20%, President and CEO Marvin Ellison said.

The company said lumber was its strongest category, driven by strong demand from both professionals and do-it-yourself customers.

Expenses drag on profits

During the pandemic, many retailers have been paying their cashiers and store staff higher wages and bonuses, and offering extended paid time-off benefits. In the third quarter, Lowe’s said it invested $245 million in Covid-related support for its frontline hourly associates. In the first nine months of the year, these added costs have tallied more than $1.1 billion.

“Lowe’s is clearly taking share,” Wells Fargo analyst Zachary Fadem said in a note to clients. “That said, the cost of this growth appears to be rising.”

Lowe’s said it expects to earn between $1.10 and $1.20 per share during its fiscal fourth quarter, while analysts had been calling for earnings of $1.17 a share. It forecasts same-store sales to grow about 15% to 20%.

Revenue growth is expected to moderate from third-quarter levels, “consistent with natural demand patterns of the home improvement sector,” the company added.

Growing with professionals

The results from Lowe’s come one day after Home Depot reported third-quarter earnings that beat estimates, as consumers continued to focus on home improvement during the coronavirus pandemic and sales surged 24% from a year earlier.

Lowe’s has largely been playing catch up to its bigger rival during the pandemic to make upgrades to its supply chain, to support its online business and to make sure it has the right products on shelves in stores.

Lowe’s has also been trying to capture a greater share of professional business, but Home Depot remains dominant in the segment. Along with do-it-yourself projects, the market for construction professionals has boomed during the pandemic.

Lowe’s said it grew its professionals business more than 20% during the third quarter, thanks to new service offerings and a better customer service experience.

It said it has been working on resetting the layout of merchandise for professionals in all of its stores, to make it a more “intuitive shopping experience” for these visitors, in a bid to drive its share of the category even higher. For example, it is placing pipe cement next to pipes and other necessary pipe fittings, something it had not done before. It also said it is adding a professionals grab-and-go area in stores.

Lowe’s is set to hold a meeting with investors on Dec. 9, to talk more about its plans for 2021 and its professionals business.

As of Tuesday’s market close, Lowe’s shares were up roughly 33% this year, giving the company a market cap of $120.8 billion.

Find the full earnings press release from Lowe’s here.

Source: https://www.cnbc.com/2020/11/18/lowes-low-reports-q3-2020-earnings.html

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Source: https://www.cnbc.com/earnings/

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Stitch Fix shares surge as online styling service reports surprise profit

Stitch Fix shares jumped after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

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The Stitch Fix application for download in the Apple App Store on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Saturday, June 5, 2021. Stitch Fix Inc. is scheduled to release earning on June 7.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Stitch Fix shares jumped 14% in extended trading Tuesday after the online shopping and styling service reported a surprise profit for its fiscal fourth quarter.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Consumers have been splurging on new outfits in recent months, as many head back to school and return to social gatherings. Some have also citied the need for new clothes after either gaining or losing weight during the Covid pandemic.

Here’s how Stitch Fix did compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 19 cents vs. a loss of 13 cents expected
  • Revenue: $571.2 million vs. $548 million expected

Net income attributable to shareholders was $28 million, or 19 cents per share, in the latest period. A year ago, it posted a net loss of $44.5 million, or 44 cents a share. Analysts had been looking for the company to book a loss of 13 cents per share.

Revenue grew to $571.2 million from $443.4 million a year earlier. That was better than analysts’ expectations for $548 million.

Stitch Fix reported nearly 4.2 million active clients, up 18% from a year earlier. The company said net revenue per active client was $505, surpassing the $500 threshold for the first time ever. Customers have been purchasing more items to keep at home, Stitch Fix said, as they have more brands and price points to choose from.

Stitch Fix defines active clients as people who either ordered a “Fix” subscription or bought an item directly from its website in the preceding 52 weeks from the final day of the quarter.

The company also said it had its lowest ever churn rate at the end of the period, meaning its customers are sticking around.

Last month, Stitch Fix finally opened up its direct-buy option, which is now known as “Freestyle,” to the public. This allows people to shop Stitch Fix for individual items of clothing, without needing to sign up for a subscription.

CEO Elizabeth Spaulding said this should help Stitch Fix grow its addressable market in the year ahead. The company’s next initiative will be to market and raise broader awareness around the offering, she said. Stitch Fix is preparing to roll out a national advertising campaign on the debut.

Early indications are that “Freestyle” is meaningfully accretive to the company’s revenue per active client metric, Spaulding told analysts on a conference call.

“Clients have agency, flexibility and choice while also experiencing a highly personalized shopping experience,” Spaulding said.

For its fiscal first quarter, Stitch Fix said it sees sales in a range of $560 million to $575 million. That’s below analysts’ expectations for $588 million.

For the upcoming fiscal year, Stitch Fix anticipates sales rising 15% or more from the prior year. Analysts polled by Refinitiv had been looking for an 18% increase.

While the entire retail industry is working through supply chain complications, Stitch Fix said it is seeing a small impact, but nothing that will hurt the business in the fall and winter months. The company said it is less reliant on Vietnam, where manufacturing has largely come to a standstill due to ongoing pandemic lockdowns in the region.

As of Tuesday’s market close, Stitch Fix shares have fallen nearly 39% this year. The company has a market cap of $3.8 billion.

Find the full press release from Stitch Fix here.

Sales for the three-month period ended July 31 also came in higher than analysts were expecting, thanks to outsized growth in Stitch Fix’s women’s and kids’ categories. Menswear has been growing more slowly, the company said.

Source: https://www.cnbc.com/2021/09/21/stitch-fix-sfix-q4-2021-earnings.html

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Earnings

Corporate Company Earnings, Find Earnings Per Share and Earnings History Online

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© 2021 CNBC LLC. All Rights Reserved. A Division of NBCUniversal

Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Market Data Terms of Use and Disclaimers

Data also provided by Reuters

Source: https://www.cnbc.com/earnings/

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