Lowe’s Cos Inc raised its full-year sales forecast on Wednesday as a decision to expedite product shipments helps the home improvement chain overcome widespread supply snarls and capitalize on an early start to holiday shopping by consumers.
The company’s third-quarter earnings also trounced market expectations, riding on a surge in demand for tools and building materials from Americans investing in their properties during a pandemic housing boom. Its shares rose 2%.
Consumers are scooping up holiday and winter products such as snow blowers earlier than in previous years, Lowe’s said, echoing comments made by big-box retailer Target Corp.
“With broader awareness of potential global supply chain disruptions, we are seeing many consumers looking to purchase products as soon as they are available in our stores,” William Boltz, the company’s vice president of merchandising, told analysts on a call.
Despite the costs of bringing holiday products into its stores and warehouses earlier than originally planned, Lowe’s gross margins expanded to 33.1% in the quarter from 32.7%.
The fatter margins, fuelled by a focus on selling big-ticket items and lower spending, contrasted with figures from Walmart Inc and Target that have reeled under high supply chain costs.
“With the market more focused on near-term gross margin trends than ever due to the supply chain issues, (Lowe’s) beat handily on that line,” D.A. Davidson analyst Michael Baker said.
Lowe’s earned a profit of $2.73 per share, beating estimates of $2.36 a share, according to Refinitiv data.
The company said it expected 2021 sales of about $95 billion, compared with a previous forecast of about $92 billion.
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