29 Nov

Lowe’s: Analysts’ Revenue Expectations for 2018

WRITTEN BY Rajiv Nanjapla

Revenue expectations for 2018

In the first three quarters of 2018, Lowe’s (LOW) posted revenues of $55.66 billion—4.8% growth from $53.13 in the same quarters the previous year. The revenue growth was driven by positive SSSG (same-store sales growth) and the adoption of a new accounting standard, which contributed ~$510 million. The company posted an SSSG of 0.6%, 5.2%, and 1.5% in the first, second, and third quarters, respectively. By the end of the third quarter, Lowe’s operated 2,133 stores—compared to 2,152 stores at the beginning of 2018. Lowe’s decision to exit some non-core businesses and close underperforming stores led to a decline in its store count.

Lowe’s: Analysts’ Revenue Expectations for 2018

For 2018, analysts expect Lowe’s to post revenues of $71.46 billion—4.1% growth from $68.62 billion in 2017. For the same period, Lowe’s management expects its revenues to rise 4.5% with its SSSG at 2.5%. The company plans to open eight new home improvement stores during the same period. However, the company’s decision to close 51 underperforming Lowe’s stores, 99 Orchard Supply Hardware stores, and its distribution facility by the end of 2018 will likely offset some of the growth during this period.

During the same period, Home Depot (HD) and Williams-Sonoma (WSM) are expected to post revenue growth of 7.3% and 6.5%, respectively.

Analysts’ revenue expectation for 2019

For 2019, analysts expect Lowe’s to post revenues of $73.20 billion—2.4% growth from $71.46 billion in 2018. To drive the company’s sales, Lowe’s management is focusing on rationalizing its store inventory by investing in high-velocity stock-keeping units and expanding the breadth of its product assortments.

However, Lowe’s decision to end its Mexican retail operations and exit its non-core businesses including Alacrity Renovation Services and Iris Smart Home could lower its revenue growth in 2019.

During the same period, analysts expect Home Depot and Williams-Sonoma to post revenue growth of 3.4% and 1.5%, respectively.

Next, we’ll discuss analysts’ EPS expectations.

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