Home improvement retailer Lowe's (LOW.US) reported its third-quarter earnings before the market opened on Wednesday, joining competitor Home Depot (HD.US) in projecting sluggish annual profit and sales growth. This year, economic uncertainty and persistent inflation have led Americans to postpone major home renovation spending.

The company posted Q3 revenue of $20.81 billion, largely in line with market expectations of $20.82 billion. Adjusted earnings per share (EPS) came in at $3.06, surpassing the average analyst estimate of $2.97. Lowe's raised its full-year sales forecast to $86 billion, up from the previous range of $84.5–$85.5 billion, citing benefits from a recent acquisition.

However, the company expects comparable-store sales—a key industry metric excluding one-time factors—to remain flat year-over-year, compared to its prior guidance of flat to 1% growth. Additionally, Lowe's trimmed its full-year adjusted EPS outlook to approximately $12.25, down from the earlier range of $12.20–$12.45.

This cautious outlook reflects broader pressures on U.S. households, including rising costs for groceries, auto insurance, healthcare, and higher borrowing costs amid a cooling labor market. Even as mortgage rates eased following the Federal Reserve's rate cuts, these headwinds have dampened anticipated demand recovery.

The home improvement sector continues to face challenges, with a sluggish housing market and elevated borrowing costs weighing on the industry for over two years. In an August earnings call, Lowe's CFO Brandon Sink emphasized that sales growth this year would rely on company strategy rather than market improvements, projecting a "roughly flat" home improvement market.

Rival Home Depot (HD.US) also cut its annual profit forecast on Tuesday after missing Wall Street's quarterly earnings estimates for the third consecutive time. CFO Richard McPhail attributed the weakness to unusually mild storm activity, a tough housing market, and consumer uncertainty.

Lowe's shares fell after Home Depot's disappointing report but rose 5% in pre-market trading Wednesday following its own earnings beat. This year, Lowe's has invested billions in acquiring Foundation Building Materials and Artisan Design Group to strengthen its appeal to professional contractors—a strategy aligned with Home Depot's moves.

While comparable-store sales are now expected to be flat year-over-year (versus August's guidance of flat to 1% growth), CEO Marvin Ellison noted positive year-over-year sales growth in November despite the absence of major storm-driven demand. According to LSEG data, comparable-store sales grew 0.4% in the quarter ending October 31, outperforming the average analyst estimate of a 1% decline.