Lowe\'s Adds $10 Billion to Stock Buyback Program

Lowe’s Adds $10 Billion to Stock Buyback Program

Home-improvement retailer also provides guidance for coming fiscal year

Washing machines, dryers and other appliances for sale at a Lowe's store in Washington, D.C. Photo: saul loeb/Agence France-Presse/Getty Images
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Lowe’s Co LOW 2.94% s. plans to increase its share buyback program by $10 billion, as the home-improvement retailer looks to turn investor sentiment and prove to Wall Street its business and growth plans are on solid footing.

The $10 billion would be added to the $4.5 billion available as of Nov. 2 for buying back shares, Lowe’s said Wednesday at an investor conference. It said the new buyback program doesn’t have an expiration date.

The announcement prompted S&P Global Ratings to cut Lowe’s credit rating to triple-B plus from A-minus, citing a less conservative financial policy from the retailer to raise shareholder returns.

“We anticipate that targeted initiatives designed to drive profitable sales, combined with an expense reduction culture, will allow us to generate significant cash flow from operations over the next three years,” Chief Financial Officer David Denton said in prepared remarks. Mr. Denton recently joined Lowe’s from CVS Health Corp.

Lowe’s shares rose 2.9% in Wednesday trading. Its stock is down 1% this year.

The home-improvement retailer also gave a forecast for earnings for the coming fiscal year ahead of analysts’ estimates. For the year ending Jan. 31, 2020, Lowe’s expects to post a profit between $6 a share and $6.10 a share, compared with the consensus estimate of $5.93 a share, according to FactSet.

The Mooresville, N.C., company said it expects sales growth of about 2% for the year. Sales at stores open at least 13 months are expected to rise 3%, roughly in line with analysts’ estimates of 3.1%.

The buyback increase comes after the company completed a strategic assessment of its operations.

Lowe’s Chief Executive Marvin Ellison, who joined the retailer in July, has called for stocking more faster-selling items while reducing inventory of lower-performing ones. Last month, the company said it would exit its retail operations in Mexico and shed its contracting service and smart-home businesses. The company previously said it would also close down its Orchard Supply Hardware operations, and close 20 underperforming stores in the U.S. and 31 stores and other locations in Canada.

Write to Kimberly Chin at kimberly.chin@wsj.com