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Lowe's Is One of the Biggest Winners of 2020

By Jennifer Saibil – Sep 1, 2020 at 10:36AM

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The home improvement chain has had high sales growth and a soaring share price.

Home improvement was one of the few categories that boomed during the coronavirus pandemic as consumers spent more time at home. Lowe's (LOW -4.03%) was one of the big winners in the segment, outdoing rival Home Depot (HD -2.41%) with a 30% sales increase and a 35% rise in U.S. comps in the second quarter ended July 31.

Digital played an important role in bolstering the company's revenue, growing 135% in the second quarter and rounding out a strong omnichannel program. Adjusted earnings per share increased to $3.75, which includes $460 million the company paid out to employees due to the pandemic. Lowe's stock has moved accordingly, gaining 37% year to date as of Tuesday morning.

Lowe's workers with a customer.

Image source: Lowe's.

CEO Marvin Ellison said in a conference call that over the past 18 months, the company has been highly focused on executing its "retail fundamental" strategy, which improved the business infrastructure and positioned Lowe's for its huge success. Some of the actions Lowe's took include fully revamping the web site and launching a top-rated mobile app; hiring experts to make quick, efficient decisions; and introducing an enhanced Pro loyalty program.  

The company declined to give a future fiscal outlook, but Ellison said in a statement that the momentum is increasing into the third quarter, and that Lowe's is making even greater investments into the company's omnichannel capabilities to offer more advanced options for customers.

Jennifer Saibil has no position in any of the stocks mentioned. 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 and short January 2021 $210 calls on Home Depot. The Motley Fool has a disclosure policy.

Stocks Mentioned

Lowe's Companies Stock Quote
Lowe's Companies
$206.18 (-4.03%) $-8.66
Home Depot Stock Quote
Home Depot
$320.08 (-2.41%) $-7.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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