Home improvement retailer Lowe's (LOW 0.21%) was a stalwart in the earlier days of the pandemic. But how is the company doing now that society has reopened and many people are going back to work? In this segment of Backstage Pass, recorded on Nov. 17, Fool contributors Brian Withers and Parkev Tatevosian discuss the company's third-quarter earnings report.
Brian Withers: Parkev, yesterday we talked Home Depot. Did Lowe's have a good quarter?
Parkev Tatevosian: They did, yeah. Let me share my screen here.
Brian Withers: I'm remembering, same-store sales comp from Home Depot yesterday was 6.1 [percent]. I can look up the comp number if you want.
Parkev Tatevosian: Yeah, I didn't pull up the comp number, but I recall seeing that it was lower than Home Depot yesterday. Yeah, so we had mentioned Home Depot reported yesterday morning, excellent results. This morning, Lowe's reported Q3 revenue came in at $22.9 billion, which handily beat estimates of $21.7 billion, up about 3% year over year. Earnings per share $2.73, also beating estimates of $2.30, and up almost 40% year over year.
The results were good enough to get management to raise the outlook for the rest of the year. They now expect revenue of $95 billion, that's up from the previously expected $92 billion. Then similar to Home Depot, comps accelerated throughout the quarter. Between August and September and October, month over month over month, comps continued to accelerate.
October comps were the highest, and they were 7% from the previous year. They're doing this impressively while expanding operating profit margin. They expanded it 240 basis points to 12.2% this quarter, and they also raised the margin outlook for the rest of the year from 12.2% to 12.4%. Then a key date for investors and shareholders to look out for is Dec.15.
Management highlighted that they'll give the fiscal 2022 outlook on Dec. 15. They'll try to discuss revenue, operating margin, and earnings per share outlook at that time. Then I guess the one concern I had from what I saw this quarter was a major change in how Lowe's is going to start shipping its products. Typically the company fulfilled online orders from their stores.
Now, they're going to shift to shipping directly from fulfillment centers. This change is going to happen over the next year or so, and it's following the test they did in Florida where it worked out well. Let's see how that works out over the next year or so.
Brian Withers: Interesting. Yeah, I looked up the same-store comps. They weren't as high as Home Depot's. They came in at 2.2%. But as I remember this same quarter last year, their comps were astounding. They had U.S. sales comps of 30%, so that 2% is on top of a 30% from a year ago. Even though it doesn't sound super-impressive, it's building on the momentum from last year, and I think investors should be excited about that.
Parkev Tatevosian: Absolutely. If I can just share an interesting slide they had. [Pause] Nope, it looks like I can't access it, but it just goes to highlight what you were talking about, how last year's growth was so astronomical, so much above what their typical rates are. For this year to be growing on top of that is what's really impressive for Lowe's.
