For 2Q17, Lowe’s Companies (LOW) is expected to post revenues of ~$19.5 billion, which would mean growth of 7.0% from around $18.3 billion in 2Q16.
Lowe’s 2Q17 revenue growth is expected to be driven by the acquisition of Central Wholesalers in November 2016 and Maintenance Supply Headquarters in June 2017, as well as by positive SSSG (same-store sales growth) and the addition of new stores. Compared to its 2,108 stores in 2Q16, LOW operated 2,137 stores at the end of 1Q17. These new stores along, with the stores opened in 2Q17, are expected to drive Lowe’s revenue.
Analysts are expecting the acquisition of Central Wholesalers along with Maintenance Supply Headquarters to expand Lowe’s capabilities to serve multifamily property management customers across the US. The enhancement of the customer experience through the redesigning and implementation of advanced features to lowes.com and LowesForPros.com are expected to drive the company’s online sales.
Lowe’s has also expanded its portfolio of brands to include SharkBite and A.O. Smith. These initiatives alongside Lowe’s marketing campaigns to drive awareness are expected to drive the company’s SSSG in 2Q17.
Meanwhile, faster home price appreciation, the reemergence of first-time homebuyers, and growth in the repair and remodel market are all expected to drive Lowe’s 2Q17 revenues.
Peer comparisons and outlook
For 2017, LOW’s management expects its revenues to rise 5%, with SSSG accounting for 3.5%, the acquisition of RONA accounting for 2%, and the addition of 35 new stores to contribute 1.0%. However, 1.5% of the revenue growth is expected to be offset by one less week in 2017 (compared to 2016).
For the next four quarters, analysts are expecting Lowe’s to post revenues of $68.9 billion, which would represent a growth of 3.4% from $66.6 billion from the past four quarters.
Next, we’ll look at Lowe’s 2Q17 margins.