The consumer focus on home improvement and housewares continued strong into the fourth quarter of 2020, as today's earnings report by hardware chain Lowe's (LOW 0.72%) highlights. The company reported comparable sales, earnings, and revenue metrics that outdid Wall Street expectations, confirming the positive indicators seen over the past few weeks, including its recent initiative to hire 50,000 new workers.
As reported by Lowe's, net sales jumped from $16 billion in Q4 2019 to $20.3 billion in 2020, soaring 26.7% and delivering a 4.1% positive surprise according to Zacks Equity Research data. Adjusted diluted earnings per share (EPS) of $1.33 beat 2019's $0.94 by 41.5% and was a 9% positive surprise.
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Comps also climbed 28.1% year over year, with a slightly higher increase of 28.6% in the home improvement category specifically. CEO Marvin Ellison said the company was able to "meet broad-based demand driven by the continued consumer focus on the home" and underlined digital sales growth of 121% on Lowes.com. The retailer paid a dividend with its cash windfall and bought back $3.4 billion in stock, which still left it with $4.7 billion in cash and $3 billion in untouched revolving credit accounts.
The metrics also indicate how strongly COVID-19 is still driving demand for home improvement products in the United States. Home Depot posted similar outstanding results yesterday, driven by the same market conditions.
Both home improvement retailers' stocks are dropping in Wednesday trading, however, largely due to expectations of waning sales as the pandemic recedes. Home Depot offered no guidance, while Lowe's said it's standing by December guidance predicting "modest mix-adjusted market contraction" in 2021, with revenue forecast to fall $4 to $8 billion from 2020's highs.
