Challenges continue at Mooresville-based Lowe’s - | WBTV Charlotte

Challenges continue at Mooresville-based Lowe’s

CHARLOTTE, N.C. (Katherine Peralta | The Charlotte Observer) - Mooresville-based Lowe’s reported disappointing earnings Wednesday morning as the retailer continues to work to catch up to its chief rival, Home Depot.

Strengthening in the housing market has provided tailwinds for home-improvement retailers, but Lowe’s still lags behind its larger competitor. In pre-market trading, Lowe’s shares were down 8.1 percent at $88.30.

Also Wednesday, Lowe’s announced that it is becoming the exclusive retailer for Sherwin-Williams’ paint products. The investment is intended to make Lowe’s a destination for do-it-yourself (DIY) customers, as painting is a top DIY home project.

The deal’s also intended to strengthen Lowe’s appeal to its fast-growing and lucrative base of professional customers. With its popular products like the Purdy-brand paintbrush, Sherwin-Williams has long been recognized as a top pro brand, a spokeswoman said.

The partnership, however, does not make Sherwin-Williams a private label, nor does it impact store staffing, the spokeswoman said.

Rising home values and a stronger labor market have helped encourage consumers to spend more on home-improvement projects, and that’s helped drive traffic at Lowe’s and Home Depot stores.

RELATED: Retailer Lowe’s is cutting more jobs, affecting stores in N.C., nationwide

Lowe’s said fourth quarter net income was $554 million, or 67 cents a share. Adjusted for non-recurring costs, earnings were 74 cents a share. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 88 cents a share.

Sales for the quarter came to $15.49 billion, beating the Wall Street estimate of $15.29 billion. Same-store sales, a key metric used to gauge a retailer’s health that refers to sales at stores open at least one year, rose 4.1 percent.

In a research note Wednesday morning, Credit Suisse analyst Seth Sigman noted that same-store sale growth in the U.S. has been better than expected. But, Sigman wrote, “the gap with (Home Depot) widened, and (Lowe’s) still seemed to perform below the industry during the period.”

Last week, Home Depot reported earnings that topped expectations thanks to continued strengthening in the housing market. The Atlanta company’s same-store sales surged 7.5 percent.

The hedge fund D.E. Shaw began building up an activist stake in Lowe’s last year as the company continued to lag behind Home Depot. Bloomberg first reported on the activist stake, and that D.E. Shaw may “use its holding to agitate for changes at Lowe’s.” 

THE ASSOCIATED PRESS CONTRIBUTED.

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