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Shares of Lowe's, the No.2 U.S. home improvement retailer,
dipped more than 5 percent to $71.78 in premarket trading.
The retailer now expects operating margin to rise 80 to 100
basis points in the year ending Feb. 2, down from an earlier
forecast for a 120-basis-point increase.
In addition to marketing, Lowe's will incur more costs related
to longer employee shifts in stores as it seeks to improve
customer experience and drive sales.
"We believe this is the right strategy to more fully capitalize
on strong traffic trends in what we believe is a supportive
macroeconomic backdrop for home improvement," Lowe's Chief
Executive Robert Niblock said.
The U.S. housing market has been facing supply constraints,
which has pushed prices up and encouraged homeowners to remodel
their homes rather than buy a new house.
Lowe's larger rival Home Depot Inc <HD.N> last week noted that
its better-than-expected quarterly results were driven by higher
consumer spending on home improvement products.
Mooresville, North Carolina-based Lowe's net income rose 21.4
percent to $1.42 billion or $1.68 per share in the second
quarter ended Aug. 4.
Excluding one-time items, the company earned $1.57 per share,
missing analysts' average estimate of $1.61, according to
Thomson Reuters I/B/E/S.
Net sales climbed 6.8 percent to $19.50 billion. Analysts had
expected $19.53 billion.
Sales at Lowe's stores open for more than a year rose 4.5
percent, edging past the 4.3 percent expected by analysts on
average, according to research firm Consensus Metrix.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sai
Sachin Ravikumar)
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