Analysts expect Lowe’s (LOW) to post revenue of $15.33 billion in 4Q17, which represents a fall of 2.9% from $15.78 billion in 4Q16. The decline is expected to be driven by one extra week of operations in 4Q16, which added ~$950 million to the company’s 4Q16 revenue.
Removing the sales contribution from the one extra week of operation in 4Q16, analysts expect Lowe’s 4Q17 revenue to rise 3.3%—which is expected to be driven by the addition of new stores, positive SSSG (same-store sales growth), and incremental sales from the acquisition of Maintenance Supply Headquarters.
Compared to 4Q16, the company operated 15 more stores in 3Q17. These new stores, along with stores opened in 4Q17, are expected to drive the company’s revenue in 4Q17. The company acquired Maintenance Supply Headquarters in May 2017. Along with Central Wholesalers, this acquisition is expected to expand the company’s professional customer reach and improve its ability to serve the multi-family housing industry with expanded products and services.
To drive SSSG, Lowe’s has been focusing on expanding its assortment by introducing innovative products, enhancing customers’ experience, expanding functionalities for Lowes.com, and other marketing and promotional initiatives.
Lowe’s has been upgrading its online experience with enhanced functionalities, and it also introduced Account Executive ProServices in Texas and Florida to support incremental demand. Along with these initiatives, the strong value proposition, 5 Ways to Save, an increase in MyLowe’s membership, and growth in hurricane-related sales are expected to drive the company’s SSSG in 4Q17.
Despite its strong 3Q17 performance, Lowe’s management maintained its 2017 SSSG guidance at 3.5% and revenue growth at 5.0%. Also, the company’s management stated that it expects to add 25 home improvement and hardware stores in 2017.
Peer comparisons and outlook
For the next four quarters, from 4Q17 to 3Q18, analysts expect Lowe’s to post revenue of $70.58 billion, which represents growth of 2.4% from $68.90 billion in the corresponding four quarters of the previous year.
In the next part of this series, we’ll look at analysts’ earnings per share expectations.