Almost all types of businesses have been struggling under this pandemic. Due to lockdowns around the world, many businesses are seeing a large fall in revenue. But there are still some businesses which have been doing well during this time. These are only businesses which are selling essential goods. Governments have allowed such businesses to stay open even during a lockdown so that people do not have to face problems.
Lowe’s, the American home improvement company, has also been running during the pandemic. Due to this, market experts were predicting that while Lowe’s revenue would drop, it would still perform relatively better.
Lowe’s Beats Expectations
Lowe’s surpassed all market predictions in the first quarter. The retail chain reported a growth of 11% in same-store sales. Since people have been staying home for so long, many people in America decided to spend money on improving their own homes. Due to this splurge in home-improvement spending, Lowe’s has been benefitting a lot. Lowe’s dominates the market share in the home improvement industry.
The 11% growth by this beat many market analysts expectations. It is one of the few companies in the world which actually saw its sales rise during the pandemic. The company’s stock rose by $5.89 to open at $122.69 on Wednesday, 20 May 2020 after Lowe’s reported its earnings. This was a rise of 5.04% from the previous close of $116.8.
But after the initial rise in premarket trading quickly went as the stock price fell down fast. The stock plummeted during the trading day and closed the day at $117.08. This was a mere 0.2% rise or $0.28 rise on the day. This might have been because most market analysts are predicting that Lowe’s will see a fall in revenue in the upcoming quarter. Investors must have had a bearish reaction to this news, causing a selling of Lowe’s shares.
Many people quickly went to it to complete their home improvement projects. But that might fall off quickly in the upcoming quarter. Analysts are not expecting high sales for the company, and Lowe’s may also start experiencing similar fall in revenue like other companies. Hence, investors should keep away from the stock for now.