Investing.com – Lowe’s (NYSE:LOW) stock traded 3.7% higher in premarket Wednesday after the home improvement retailer lifted its annual sales and profit forecast, encouraged by the strength in demand for tools and building materials.
The pandemic had led people to upgrade their dwellings or refurbish the new ones they moved to. Reopening of offices was expected to soften the do-it-yourself projects.
While offices are indeed reopening, more people are also choosing to work from home or move away from cities to smaller towns. Therefore, demand for toolboxes, bookshelves, and cotton rugs stayed high.
Total fourth quarter sales rose 5% to top $21 billion. Comparable sales, including that for the U.S. home improvement business, also rose as much.
The retailer also managed to improve its margins in times of high inflation.
Lowe’s said it expects 2022 total sales of $97 billion-$99 billion, compared to a previous forecast of $94 billion-$97 billion. It expects gross profit margins to be up slightly compared to prior year, a relief arguably for traders at a time when just about every company, from banks to retailers, is warning about inflationary pressures. It expects annual diluted profit per share to be $13.35 at the center of its guidance range.
Fourth quarter adjusted profit per share rose 35% to $1.78 to come in ahead of estimates, driven by higher margins.