(Reuters) – Lowe’s Cos Inc blew past analysts’ estimates for quarterly sales and profit on Wednesday as it benefited from a surge in demand for home improvement products from consumers stuck indoors due to the COVID-19 pandemic.
The company also posted a 34.2% rise in quarterly same-store sales, beating analysts’ estimates of a 13.2% increase, and said the momentum was carrying into August.
With a large base of do-it-yourself customers, Lowe’s has been among the chief beneficiaries of people undertaking minor home repair, painting or gardening work during the crisis.
That helped the company’s same-store sales far outpace the 23.4% rise recorded by larger rival Home Depot Inc, which relies more on demand from handymen, carpenters and professional contractors, whose businesses have only recently started to pick up.
Wedbush Securities analysts estimate that nearly 75% of Lowe’s sales come from DIY customers, compared with about 55% for Home Depot.
“Lowe’s Q2 is one for the record books,” Well Fargo analysts wrote, adding that while DIY demand could slow in coming quarters, Lowe’s would still see the benefits of more people moving out to suburban areas – closer to where a majority of its stores are located.
Total net sales rose 30.1% to $27.30 billion, beating expectations of $24.27 billion, according to IBES data from Refinitiv.
Net earnings rose nearly 70% to $2.83 billion, or $3.74 per share, in the quarter, despite the company spending about $460 million on improving store safety, as well as additional compensation for its employees working during the crisis.
Excluding items, the company earned $3.75 per share, while analysts had expected a profit of $2.95 per share.
Shares of the company were up 1.5% in trading before the bell.
Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva.