Lowe's adjusts full-year forecast due to anticipated decline in home improvement sales.

• Although Lowe's met earnings expectations in the second quarter, it fell short on sales and adjusted its full-year forecast.
• Lowe's cited "lower-than-expected DIY sales and a pressured macroeconomic environment."
• A week after Home Depot predicted a weaker second half of the year, Lowe's reported its results.

The home improvement retailer cut its full-year forecast on Tuesday due to declining quarterly sales and predicted that spending on DIY projects would decrease.

The company has revised its sales forecast for the year, expecting total sales to be between $82.7 billion and $83.2 billion, compared to the previously forecasted range of $84 billion to $85 billion. Additionally, the company now anticipates a decline in comparable sales of 3.5% to 4%, compared to its prior forecast of a 2% to 3% decline. The company also expects adjusted earnings per share to be approximately $11.70 to $11.90, compared to the previously forecasted range of between $12 and $12.30.

Lowe's reported lower-than-expected DIY sales and a pressured macroeconomic environment in a news release.

According to a survey of analysts by LSEG, the company's fiscal second quarter results differed from Wall Street's expectations.

• Earnings per share: $4.10 vs. $3.97 expected
• Revenue: $23.59 billion vs. $23.91 billion expected

Lowe's net income decreased to $2.38 billion, or $4.17 per share, in the three months ending Aug. 2, compared to $2.67 billion, or $4.56 per share, in the previous year.

In the second quarter of 2022, Lowe's earned a pre-tax gain of $43 million from the sale of its Canadian retail business, resulting in a 7-cent increase in earnings per share. If we exclude this gain, the company's earnings per share would have been $4.10.

Lowe's experienced a year-over-year sales decline for the sixth consecutive quarter, with net sales dropping from $24.96 billion in the previous year.

The company reported a 5.1% decline in comparable sales, which excludes one-time factors like store openings and closures. This drop was due to a decrease in discretionary home projects and unfavorable weather affecting sales of outdoor and seasonal items. However, the company noted that this decline was partially offset by growth in its online business and sales to home professionals, such as contractors and electricians.

Lowe's reported its quarterly results and forecast for the future at a time when investors and economists are closely monitoring consumer spending. Recent economic data and corporate earnings have provided mixed signals about American households' financial well-being, as the Federal Reserve considers a rate cut.

Despite lower-than-expected job growth in July, CFO John David Rainey of the largest U.S. retailer stated that there is no additional fraying of consumer health. Additionally, Goldman Sachs reduced the odds of a recession to 20%.

Higher mortgage rates and borrowing costs may put more strain on home improvement retailers. Despite beating Wall Street's quarterly expectations for earnings and revenue, Lowe's rival expects the back half of the year to be weaker due to a "deferral mindset" among consumers.

In an interview with CNBC, Home Depot CFO Richard McPhail stated that customers are delaying projects due to higher interest rates and a sense of economic uncertainty, despite most of Home Depot's customers owning homes and experiencing property value increases.

Lowe's stock closed at $243.21 on Monday, resulting in a 9% increase, although it lagged behind the S&P 500's nearly 18% gain.

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