MOORESVILLE, N.C.-Declines in sales and margins, along with a pretax charge related to reduction in staff, led Lowe’s to a 10 percent drop in second-quarter net income, to $747 million.
Robert Niblock, Lowe’s chairman, president and CEO, said the quarter, which ended on Aug. 3, “fell short of our overall expectations.” Net sales slipped 2.1 percent to $14.2 billion, which included a decrease of 0.2 percent in U.S. same-store sales. The sales decline was instrumental in reducing Lowe’s gross margin in the quarter by 56 basis points, to 33.9 percent.
Selling, general and administrative expenses were down 1.9 percent in dollar terms, but rose four basis points as a percentage of sales to 22.3 percent. The pretax charge, which slimmed net income by $15 million, was due to previously announced layoffs in the staff at the retailer’s U.S. headquarters.
Based on the second-quarter results, Lowe’s now expects total sales for the fiscal year to be flat in comparison with last year’s sales, with a same-store-sales increase of about 0.5 percent. Expressing confidence in the company’s strategy and employees, Niblock added that “we fully understand that we must improve our level of execution.”