Lowe’s is in a good place amid an improvement in the home improvement market, an analyst says, despite a decline in the company’s earnings and net sales last year.

The company’s net earnings fell 10 per cent to $6.96 billion in the year ended January 31. Its net sales declined 3.1 per cent to $83.67 billion. That followed a decline in third-quarter sales announced in November.

In the fourth quarter, net earnings rose 10.3 per cent to $1.13 billion, while net sales slid 0.3 per cent to $18.55 billion.

“The improvement in Lowe’s trading is another proof point that the home improvement market finally emerged from the gloomy lowlands in the final quarter of the year,” said Neil Saunders, GlobalData MD.

“More pleasingly, comparable sales have just edged into positive territory with a 0.2 per cent uplift over the prior year. This breaks an eight-quarter run of consistent comparable declines.”

For the current year, Lowe’s forecasts sales to be between $83.5 and $84.5 billion and comparable sales to be flat to up 1 per cent.

“This reflects the theme of caution in the face of uncertainty that we have seen coming from multiple retailers; in Lowe’s case, this is justified,” said Saunders about the forecast.

“The home improvement market might have reached the bottom of its long period of decline, but we do not believe the recovery will be a straight upward line. There are too many pressures on the market, including elevated interest rates and potentially higher prices from tariffs, to guarantee such stability,” he continued.

“Overall, Lowe’s is in a good place. The challenge is to ensure it takes its share of organic growth now coming through and doesn’t allow Home Depot to grab the lion’s share,” Saunders added.