Lowe’s Rises Most Since April as CFO Sees 2021 Margin Boost

(Bloomberg) -- Lowe’s Cos. laid out for investors on Wednesday its plans to hold onto and grow the market share it picked up during the pandemic, including an expanded online business and more focus on professional contractors. Shares rose the most intraday since April.

Key Insights

• The home-improvement retailer, which was already carrying out a multi-year growth plan under Chief Executive Officer Marvin Ellison, has benefited as Americans spruce up their homes during the pandemic. It’s going to lean further into that idea of being a “total home solution,” Ellison told investors, including modernizing its installation services and becoming more localized.
• Lowe’s finance chief, Dave Denton, said Lowe’s has laid out multiple scenarios about what the market will look like in 2021. For example, a robust, moderate and weak market. Denton said all of the scenarios would lead to higher operating margin.
• One area where Lowe’s wants to grow is the lucrative pro business, which caters to professional builders. The segment has been in the spotlight after rival Home Depot Inc. said it would acquire building products distributor HD Supply Holdings Inc., a major operator in the segment. Investors want to know how Lowe’s is keeping up.
• The full-year outlook it released should not have come as a surprise, since it included a reiterated fourth-quarter outlook it had already shared. It sees comparable sales up about 23% this year, and adjusted earnings of $8.62 to $8.72 a share, right on track with estimates.
• The board also authorized a new $15 billion stock-repurchase program.

Market Reaction

• Lowe’s shares climbed as much as 5.6% in New York. The stock was up 26% this year through Tuesday’s close and has been one of the best performers on the S&P 500 Retailing Index this year.

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