NEW YORK — Lowe’s Cos., the second-largest U.S. home-improvement retailer, posted fourth-quarter profit that topped analysts’ estimates as the company revamps its stores to take advantage of a boom in home remodeling.
Net income in the three months through Jan. 30 rose 47 percent to $450 million, or 46 cents a share, Mooresville, N.C.-based Lowe’s said Wednesday in a statement. Analysts estimated 44 cents, according to data compiled by Bloomberg.
The retailer has been increasing space for seasonal goods and national brands while also adding design services as rising housing values encourage homeowners to renovate their properties. The results show Lowe’s is mostly keeping pace with Home Depot Inc., which also reported profit that topped analysts’ estimates Tuesday.
Home Depot’s same-store sales growth of 7.9 percent beat analysts’ projection for a 5.5 percent gain.
“There is a lot of pent-up demand around homes,” David Strasser, an analyst at Janney Montgomery Scott in New York, said in an interview. “The category is very strong.”
Lowe’s same-store sales, a key metric for retailers because only established locations are counted, rose 7.3 percent, the best performance in six quarters. Analysts projected a gain of 5.1 percent, according to Consensus Metrix. Total revenue increased 7.5 percent to $12.5 billion, topping analysts’ $12.3 billion estimate.
Lowe’s said profit in the current fiscal year will be $3.29 a share and that sales would increase as much as 5 percent. Analysts projected profit of $3.28 a share and a 4.6 percent gain in sales.
Of all the data points on the housing market, Lowe’s and Home Depot see home values as the most important because they drive people to spend on repairs and remodels.
Gains in home prices slowed much of last year, then picked up speed in the fourth quarter as low mortgage rates and the improving job market spurred demand. The median price of an existing single-family home rose from a year earlier in 86 percent of the 175 metropolitan areas measured, the National Association of Realtors said in a Feb. 11 report. Twenty-four areas had price gains of 10 percent or more, up from 16 regions in the third quarter.
“Our transformation is gaining momentum, and macroeconomic fundamentals are aligned for modestly stronger home improvement industry growth in 2015,” Lowe’s Chief Executive Officer Robert Niblock said in the statement.
