Lowe’s reported 2Q18 adjusted EPS of $2.07, up from $1.57 from the year-ago quarter and ahead of the $2.02 consensus estimate. Net sales were $20.89 billion, up 7.1% year over year and ahead of the $20.77 billion consensus estimate.
Comps increased by 5.2%, driven by a 4.5% increase in average ticket, 0.6% increase in total transitions and positive in-store and online traffic numbers. Comp sales for the US were up 5.3%, with positive comps in all 14 geographic regions. Online comps for Lowes.com increased 18% from the year-ago quarter.
Comps were positive in eight of 11 product categories. Outdoor categories showed significant strength, with double-digit comps in lawn and garden, driven by broad-based strength in lawn care, live goods and landscape products. Seasonal and outdoor living categories reported high single-digit comps.
Pro demand as well as inflation drove strong comps in rough plumbing and electrical and lumber and building materials. To continue growing sales to Pro customers, Lowe’s plans to strengthen its portfolio of Pro-focused brands.
The company announced it will close all 99 of its Orchard Supply Hardware stores by year-end, lowering its full-year outlook as a result. Closing Orchard Supply will cost about $230 million in lease cancellations, layoff-related costs and other expenses. The closure of Orchard is part of an “aggressive rationalize store inventory” strategy, which will allow Lowe’s to refocus on its core home-improvement business, better manage inventory and stabilize gross margin.
Lowe’s named David Denton, CFO of CVS Health, as CFO, effective once the CVS acquisition of Aetna is completed, which is expected to be finalized in the second half of the year.
For 2018, the company expects the following: