Lowe’s Shares Tumble Wednesday After Sharing Sales Outlook

Dec 15, 2021 By MarketDepth

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Lowe’s (NYSE” LOW) shares tumbled Wednesday after disclosing its sales forecast, which ultimately disappointed investors and raised worry regarding the future of do-it-yourself projects that have been so popular throughout the pandemic. Shares fell under 1% after having dipped approximately 4% in premarket trading.

Sector Pullback

According to Chief Financial Officer Dave Denton, the company is preparing for a “modest sector pullback in 2022” after a year of high demand. Nevertheless, he said that Lowes expects sales to outperform rivals as it wins more market share from home professionals.

“Next year we expect that our disciplined execution will drive productivity across the company, enabling us to deliver further operating margin expansion, robust cash flow generation and higher ROIC. We look forward to increasing our long-term operating targets at our next Analyst & Investor Conference in December 2022, when we will provide the building blocks to our next operating margin milestone.”

CFO, Dave Denton

CEO Marvin Ellison says that the company has many growth drivers for the upcoming year. Ellison highlighted that the company would be launching new private brands, growing its e-commerce business and is set to become a one-stop-shop for products to help the elderly age in their own homes. Those factors will “expand our share of wallet with both the DIY and pro customers,” he said.

“There’s been a longer term shift in the consumer mindset about the importance of the home. Our view of the home is a sanctuary that may need to serve several multiple purposes: residence, office, school, gym, and a gathering place for indoor and outdoor entertainment. And given the extension of remote work, we’re expecting a permanent step up in repair and maintenance cycle.”

CFO, Dave Denton

Amid the trust in the company’s growth trajectory and cash flow capabilities, the Board of Directors has approved a USD13 Billion common stock repurchase program. The new program does not have an expiration date and is an addition to the previous program’s balance of USD7.3 Billion. Lowes now has a total share repurchase authorization of about USD20 Billion.

Lowes shares have risen 57% throughout the year and have a current market value of USD170.10 Billion.