The North Carolina-based home improvement retailer also announced it will be shuttering all 99 Orchard Supply Hardware stores that it owns by the end of this year as it works to “aggressively rationalize store inventory.”
Lowe’s shares fell more than 4 percent in premarket trading on the news.
Net income was $1.52 billion, or $1.86 a share, compared with $1.42 billion, or $1.68 per share, a year ago. Excluding one-time items, Lowe’s earned $2.07 a share, 5 cents ahead of analysts’ expectations, based on a poll by Thomson Reuters.
Revenue climbed 7.1 percent to $20.89 billion, again ahead of the $20.78 billion anticipated by analysts.
Sales at Lowe’s stores open for at least 12 months were up 5.2 percent, compared with a forecast for growth of 5.3 percent. Far outpacing Lowe’s, Home Depot reported same-store sales growth last week of 8 percent for the second quarter.
“We are committed to driving even stronger performance in the future by sharpening our focus on retail fundamentals and by limiting any projects and initiatives that take us away from our core mission of being a great omni-channel home improvement retailer,” CEO Marvin Ellison said in a statement.
Ellison, former J.C. Penney CEO and a top executive at Home Depot for more than a decade, just took the helm as CEO of Lowe’s last month, succeeding Robert Niblock. The home improvement retailer has since brought on a new head of stores, Joseph McFarland, who also came from Penney, along with a new head of supply chain, Donald Frieson, who came from Walmart.
Lowe’s also on Wednesday named David Denton, current CFO of CVS Health, as its CFO, effective as soon as CVS acquires Aetna, which is expected to be finalized in the second half of this year. He will succeed Marshall Croom, whose retirement from Lowe’s had previously been announced.
Ellison is anticipated by industry analysts to shake things up at Lowe’s, which often falls under the shadows of Home Depot. Activist investor D.E. Shaw & Co. built a stake in Lowe’s earlier this year, CNBC reported, concerned about the company’s performance relative to peers.
More broadly, Lowe’s has benefited as consumer confidence has strengthened in the U.S. and unemployment remains low. Shoppers are seen investing in their homes in particular to increase property values.
Looking to the full year, Lowe’s said it expects to earn between $4.50 and $4.60 a share, with same-store sales climbing as much as 3 percent.
Lowe’s shares are up about 6 percent so far this year, bringing the company’s stock value to about $80.1 billion. That compares with Home Depot, which has a market cap of about $231.4 billion and has watched its shares climb a little more than 5 percent over the same time period.