Core & Main (CNM) Stock: Plunges 24.91% as Lowered Guidance, Rising Costs and Weak Housing Demand Trigger Sharp Decline

TLDR

• Core & Main plunges 24.9% as outlook cut overshadows strong Q2 results
• Stock tanks after Core & Main trims FY25 sales and EBITDA guidance
• Q2 profits rise, but weaker outlook drives Core & Main’s stock down 25%
• Core & Main slashes forecast, shares sink despite sales and margin gains
• Rising costs, soft demand spark sharp Core & Main sell-off after Q2

Core & Main’s stock price dropped 24.91% in a single trading day, closing at $50.00 after a $16.59 decline.

Core & Main (CNM)

The sharp fall came immediately after the company released its second-quarter results and lowered its full-year outlook. Despite reporting increased sales and profits, management’s revised guidance sparked strong market reaction.

Full-Year Outlook Cut Drives Stock Sell-Off

Core & Main reduced its fiscal 2025 full-year guidance, citing rising expenses and weaker residential demand. The company now expects net sales between $7.6 and $7.7 billion, down from its earlier range. Management also cut adjusted EBITDA expectations to between $920 and $940 million.

The revision includes an operating cash flow forecast of $550 to $610 million for the year. This represents a modest growth rate despite Core & Main’s previous momentum. The announcement overshadowed strong quarterly results, sending shares into a steep decline.

Weaker growth in residential lot development and increased SG&A expenses prompted the updated projections. Core & Main plans targeted cost measures to offset the rising pressure on margins. But the trimmed expectations raised concerns about growth sustainability in the near term.

Q2 Results Show Strong Margins but Rising Expenses

In Q2 2025, Core & Main posted net sales of $2.093 billion, up 6.6% from the prior year’s $1.964 billion. Gross profit rose 8.1% to $560 million, improving the gross margin to 26.8%. Net income grew 11.9% to $141 million, supported by higher volumes and margin expansion.

Diluted earnings per share increased 14.8% to $0.70, driven by improved profits and share repurchases. Adjusted EBITDA came in at $266 million, up 3.5% compared to last year. However, SG&A expenses climbed 12.7% to $302 million, outpacing revenue growth.

Rising operating costs, particularly in personnel and distribution, strained profitability. Despite better pricing and sourcing strategies, these expenses reduced the operating leverage. As a result, Core & Main’s operating income rose just 4.4% to $213 million.

Solid First Half Undermined by Soft Outlook

For the six months ended August 3, 2025, net sales increased 8.1% to $4.004 billion. Gross profit rose 8.5% to $1.07 billion, maintaining a healthy margin of 26.7%. Net income reached $246 million, up 8.4% year-over-year.

Adjusted EBITDA for the period rose 3.4% to $490 million, supported by strong sales volume and improved gross margins. SG&A expenses jumped 13.3% to $595 million, again pressuring operating results. Cash flow from operations fell to $111 million, down from $126 million last year.

Despite recent acquisitions and new market entries, rising costs and soft residential demand remain key risks. The revised outlook points to slower earnings momentum in the coming quarters. Core & Main maintains long-term confidence, but short-term expectations now reflect market headwinds.

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