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E-Commerce Struggles Contribute to a Sales Slowdown for Lowe’s

By Demitri Kalogeropoulos - Feb 26, 2020 at 9:12AM

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The retailer projected more revenue and profit gains ahead in 2020.

Lowe's (LOW 2.12%) on Wednesday announced earnings results showed it is still trailing its major retailing rival Home Depot (HD 1.35%). Yet the home improvement giant had some good news to report on the profitability front.

A couple shops for home appliances.

Image source: Getty Images.

What happened?

Sales growth landed at 2.5% in the core U.S. market, compared to Home Depot's 5%. That result was just below management's expectations, and Lowe's blamed its struggling e-commerce division for the shortfall. That segment was flat, executives said, while digital sales jumped 21% at Home Depot.

"Our sales growth was driven almost entirely by our U.S. brick and mortar stores," CEO Marvin Ellison said in a press release. Lowe's is working to modernize that digital shopping experience to better compete with world-class platforms like Home Depot's.

What's next?

Lowe's projected that 2020 will include more sales growth, although the pace of gains will trail its bigger peer. The company sees robust earnings gains ahead, though, as cost cuts help profitability expand.

Lowe's said the housing market looks strong, with positive economic growth likely to support another boost in home improvement spending this year. "We are well positioned to capitalize on solid demand in a healthy home improvement market," Ellison explained.

Demitrios Kalogeropoulos owns shares of Home Depot. The Motley Fool owns shares of and recommends Home Depot. The Motley Fool recommends Lowe's and recommends the following options: long January 2021 $120 calls on Home Depot. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
$206.47 (2.12%) $4.29
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
$314.89 (1.35%) $4.20

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