• Lowe's sales have gotten a lift from Americans who fixed up their yards, tackled DIY projects and redecorated rooms during the Covid pandemic. But the company warned the robust pace could cool in the year ahead.
• The home improvement retailer said same-store sales could drop by as much as 3% or be roughly flat in fiscal 2022 compared with this year.
• CEO Marvin Ellison said the company can keep driving growth by launching private brands, attracting more home professionals, and making its e-commerce business faster and more efficient.

Lowe's sales outlook disappointed investors on Wednesday and raised concerns the pandemic-fueled boom in do-it-yourself and decorating projects is cooling.

The company's shares dropped by as much as 4% in premarket trading. Then, the stock rose later Wednesday as new data from homebuilders showed a huge appetite for housing — even during a typically slow season and a period of inflation. That backdrop coupled with Lowe's executive comments about the possibility for market share gains, help the stock bounce back.

Shares rose 2% to close at $257.54 on Wednesday. The company's stock is up about 60% this year, bringing its market value to $173.52 billion.

During an analyst meeting, Chief Financial Officer Dave Denton said the retailer anticipates its sales will outpace competitors and it will win more business from home professionals. Still, he acknowledged that Lowe's is preparing for a "modest sector pullback in 2022" when compared with a year of such high demand and sales fueled by government stimulus.

Lowe's sales have gotten a lift from Americans who fixed up their yards, tackled DIY projects and redecorated rooms during the Covid pandemic. Even as some of those "nesting trends" recede, however, its sales have been buoyed by the strong real estate market.

The company projected that same-store sales could drop by as much as 3% or be roughly flat in fiscal 2022 compared with this fiscal year. Total same-store sales will range from $94 billion to $97 billion in its upcoming year. That fell below analysts' estimates of $97.64 billion, according to Refinitiv.

Lowe's is estimating overall sales of about $95 billion for this fiscal year, which is one week shorter than next fiscal year.

For fiscal 2022, Lowe's expects to earn between $12.25 and $13.00 per share. On average, analysts were expecting Lowe's to earn $12.93 per share, according to Refinitiv.

CEO Marvin Ellison said the company can keep driving growth by launching new private labels, expanding its e-commerce business and becoming a one-stop shop for supplies to help older adults age in their own homes. For example, he said it is debuting a modern decor brand called Origin 21. He said it is speeding up deliveries of big and bulky purchases, such as appliances, with a new pilot in Florida and Ohio. That more efficient process is boosting profits and customer satisfaction, he said.

Together, he said, those efforts will "expand our share of wallet with both the DIY and pro customers."

Ellison said the retailer will benefit from a favorable backdrop, too, including more money in consumers' savings accounts, historically low interest rates, rising home values and an aging inventory of U.S. homes. About two-thirds of the company's sales are driven by repairs and maintenance, he said.

Plus, Ellison said the pandemic has inspired people to invest more in their homes, from millennials who are buying first homes to baby boomers who are adapting an older home.

"There's been a longer-term shift in the consumer mindset about the importance of the home," he said. "Our view of the home is a sanctuary that may need to serve several multiple purposes: residence, office, school, gym, and a gathering place for indoor and outdoor entertainment. And given the extension of remote work, we're expecting a permanent step up in repair and maintenance cycle."

Separately, the company said it plans to buy back about $12 billion in shares both this year and next year.