The home improvement retailer is extending employee shifts to improve customer service. As Fred Katayama reports, its quarterly profit and sales missed Wall Street's estimates, sending shares down.
Lowe's quarterly profit and sales surged. But those results missed Wall Street's estimates, and the home improvement retailer warned that profit margin growth would slow. Chopping at those margins: Lowe's plans to extend employee shifts on weekends to improve customer service and spend more on marketing to boost sales. Lowe's shares dropped at the market open Wednesday, nearly erasing their meager gains for the year. Morgan Stanley cut the price target on the stock. On the plus side, as at rival Home Depot, more customers visited Lowe's stores and spent more money. Strong demand for appliances, lumber, and lawn and garden goods helped push existing store sales higher and beat consensus estimates. Tesley Advisory senior analyst Joseph Feldman said, "It feels like their sales trends are fine. They are for whatever reason always having some issues really driving that and capturing the full profitability from it." Rising home prices due to supply constraints have encouraged homeowners to remodel instead of buy new houses. Lowe's said the outlook for the home improvement industry remains positive, driven by personal income, home prices and housing turnover.