Lowe's Investors Take Guidance Cut in Stride

Dow Jones08-20 06:54

1849 ET [Dow Jones]--Lowe's cut its full-year guidance and missed Wall Street's estimates for comparable sales in the latest quarter, but the stock still managed to close up about 2% higher at $220. D.A. Davidson analyst Michael Baker says investors likely see the issues that Lowe's faced in the recent quarter as temporary, given its comparable sales miss was largely due to promotional pressures as competitors invested tariff refunds into offering lower prices. Home Depot has received around $730 million in tariff refunds, with $685 million flowing through in the second quarter, while Lowe's received just $80 million of refunds in the quarter, or roughly 22% of the $365 million Baker is estimating. "This should help LOW in the back half, but we think the company is more likely to reinvest funds into loyalty drivers like delivery rather than getting too competitive on price," he says.

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