By (Reuters) -Lowe’s cut its annual profit and sales forecasts on Tuesday, echoing bigger rival Home Depot (NYSE:HD)’s concerns of a slim chance of a recovery in home improvement demand in the second half of the year.
The U.S. Federal Reserve was expected to cut interest rates earlier this year, but insufficient proof of easing inflation thus far has kept the rates high, which is affecting both home sales and home improvement project demand.
Placer.ai data showed that fewer new home sales in May and June pressured store traffic for Lowe’s (NYSE:LOW) and Home Depot.
Unusually warm weather also dented sales as consumers put off expensive lawn and renovation projects, typically scheduled for the spring season.
Home Depot last week forecast a decline in annual profit and a bigger drop in annual comparable sales.
Tepid demand for do-it-yourself (DIY) projects hit Lowe’s second-quarter comparable sales, which fell 5.1%, more than analysts’ expectation of a 4.11% drop, per LSEG data.
The company now expects full-year adjusted earnings per share of about $11.70 to $11.90, down from about $12.00 to $12.30. It also sees a 3.5% to 4% drop in comparable sales, compared with its earlier forecast of a 2% to 3% drop.
Shares of the company were flat in premarket trading.
“While we never love negative revisions, we think investors already anticipated a similar change,” said Truist analyst Scot Ciccarelli in a note.
Home Depot and Lowe’s have tried to bulk up their Pro business to engage more repair and remodel contractors and property managers, as demand from individual customers for plumbing, kitchen cabinets and roofing works remains weak.
Lowe’s beat second-quarter profit expectations on gains in the Pro business and cost control measures.
Excluding items, the company reported adjusted earnings per share of $4.10, above LSEG expectations of $3.97.
