Will Lowe’s Revenue Growth In 2020 Be Better Than 2019?

January 28th, 2020 by Trefis Team
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LOW: Lowe's logo
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Lowe's

Lowe’s (NYSE: LOW) is expected to make $75.1 billion in revenues for 2020. The specialty retailer’s revenues are expected to grow at a 6% CAGR between 2016 and 2020.

In 2020, Lowe’s plan is to renovate its digital platform and move it to a new cloud service that will help fix its supply bottlenecks and pricing challenges. In addition, the company has been struggling in the Canadian market of late. Consequently, it could further shut down some more under-performing stores in Canada and consolidate its retail brands. Furthermore, Lowe’s could substantially gain from the ongoing economic metrics like low unemployment and rising wages into 2020. Therefore, we expect the company’s revenues to grow 5% year-over-year (y-o-y) in 2020, as compared to growth of 4% y-o-y in 2019, which came over growth of 6% y-o-y in 2018. (As shown in the graph below)

Revenue growth further helped by stable margins, and strong expansion in Lowe’s valuation multiple has been key to Lowe’s 67% price appreciation during the same period.

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We have created an interactive dashboard Lowe’s Revenues: How Does Lowe’s Make Money? where we discuss Lowe’s business model, followed by sections that review past performance and 2020 expectations for Lowe’s revenue driver and competitive comparisons with Home Depot, Walmart, and Bed Bath & Beyond.

  • Overall, Lowe’s revenue increased from $59 billion in 2016 to $68.6 billion in 2018, driven by an increase in comparable sales as a result of a higher average ticket and new store additions, partially offset by reduced customer transactions and adoption of the new revenue recognition standard.
  • We expect revenue to grow by 9% to about $75 billion in 2020, driven by the ongoing underlying macroeconomic fundamentals in the U.S., which remain supportive – as the solid pace of job growth, accelerating wage increases, and home price appreciation continues to be tailwinds for this industry.

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