Lowe's second-quarter profit beats on resilient home repair demand

By Angela Christy M

Aug ‌19 (Reuters) - Lowe's beat ​second-quarter ​profit and margin estimates on Wednesday, helped by enduring demand for home repairs after winter, though cautious consumer spending forced ‌the home-improvement retailer to lower annual targets.

The results come a day ⁠after larger rival Home Depot beat quarterly expectations and maintained full-year targets, raising investor ‌expectations for the home-improvement sector.

Lowe's ‌shares rose 4% in early trading, reversing course after falling 3% before the bell.

The stock gained along with homebuilders such as D.R. Horton, ​on hopes of lower mortgage rates and a recovery in the housing market. The U.S. government said on Wednesday morning it would double ⁠the size of liquidity support for buyback of longer-dated securities.

Lower long yields help reduce mortgage rates, ​making housing more affordable.

"Housing turnover is the single-most important driver of home improvement demand, because people renovate when they buy ​and when they sell," said Bryan Hayes, ‌strategist at Zacks Investment Research.

Demand generated by contractors helped Lowe's, like rival Home Depot, offset softness in large, do-it-yourself ⁠remodeling projects that require loans.

Repair-and-maintenance demand was relatively resilient as homeowners spent on necessary upkeep.

"Customers continue to be cautious and are prioritizing how they invest in ⁠their homes," CEO Marvin Ellison said on a post-earnings call.

Lowe's, which earlier expected its comparable ​sales this year to remain flat or grow up to 2%, now sees no annual growth.

The retailer posted earnings per share of $4.27 for the quarter ended July 31. ‌Analysts on average expected $4.22, according to data compiled by LSEG. Gross margins of $8.58 billion also topped estimates of $8.54 ‌billion.

Sales of $25.96 billion, however, lagged estimates of $26.16 billion, as same-store sales increased 0.2%, ⁠below expectations of 0.8% growth.

Lowe's ‌said its outlook now ​includes tariff refunds recognized in the quarter, but did not specify the amount.

(Reporting by Angela Christy in Bengaluru; Editing by ‌Joyjeet Das)

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