What’s Going On Here?
When shoppers went to Lowe's, its shares went high: the DIY retailer’s stock climbed on Wednesday after it announced a better-than-expected third-quarter profit and forecast for the rest of the year.
What Does This Mean?
Lowe’s update wasn’t entirely stately, but it was a big improvement on arch-rival Home Depot’s worse-than-expected update on Tuesday. Sales in the home improvement chain’s stores didn’t grow by as much as hoped, meaning revenue fell short, but its raised earnings forecast kept investors from blowing the whistle.
Another member of US royalty, Beyoncé, will be pleased to hear that her favorite retailer, Target, reported expectation-beating revenue and profit on Wednesday too (tweet this). Target also raised its earnings prediction for this all-important holiday quarter, when it makes most of its sales. By opening new Disney stores within its own stores – as well as offering perks like free product shipping – it’ll hope to capitalize on customers’ seasonal demand for toys.
Why Should I Care?
For markets: A sigh of relief.
Lowe’s and Target’s shares both rose on Wednesday: by 13% and 6% respectively. While that’s likely in part down to their positive updates, it’s also possible investors who’d been selling the day before did a U-turn. They might’ve previously been worried that retail results as a whole would disappoint, after department store chain Kohl’s reported worse-than-expected quarterly earnings and cut its profit forecast for the rest of the year. And that was true for Urban Outfitters late on Tuesday – which then cut a lonely figure on Wednesday, falling 14%.
The global picture: Retail’s weakening in the UK too.
While British consumers have been earning more and increasing their spending in general, some retailers have still struggled. Shares of Kingfisher – Europe’s answer to Lowe’s – fell 7% on Wednesday after reporting weak third-quarter sales. British drinks company Fevertree, meanwhile, warned investors of an upcoming slowdown in its sales.
