An exterior view of a Lowe’s ironmongery store within the Buckhorn Plaza shopping mall.
Paul Weaver | Light rocket | Getty Images
Lowes exceeded Wall Street’s quarterly profit and sales expectations on Tuesday, at the same time as do-it-yourself customers bought inexpensive items.
The home improvement retailer’s findings were consistent with those of Home Depot last week. Home Depot missed sales expectations, which the corporate blamed on a tougher real estate market and a delayed begin to spring.
Lowe is sticking to its full-year guidance. The company expects total revenue to be between $84 billion and $85 billion, down from $86.38 billion in fiscal 2023. The company expects comparable sales to say no between 2% and three% in comparison with last 12 months and expects earnings per share of roughly $12 to $12.30.
In an interview with CNBC, Marvin Ellison said a mix of things have kept consumers from spending more freely, including pressure from inflation and uncertainty about when the Federal Reserve might cut rates of interest.
“Interest rates may fall, but consumer confidence must increase,” he said.
He said Lowe’s held off on raising its full-year forecast because it awaits a few of its biggest sales days. Spring is the vacation season for DIY enthusiasts.
Here’s what the corporate reported for its fiscal first quarter in comparison with Wall Street’s expectations, based on an analyst survey from LSEG:
- Earnings per share: $3.06 versus expected $2.94
- Revenue: $21.36 billion versus expected $21.12 billion
For the three-month period ended May 3, Lowe’s net income fell to $1.76 billion, or $3.06 per share, compared with $2.26 billion, or $3.77 per share share within the previous 12 months.
Sales fell from $22.35 billion in the identical period last 12 months. It was the fifth consecutive quarter during which Lowe’s reported a year-over-year decline in sales.
Shoppers visited Lowe’s stores and website less as homeowners postponed major projects and purchased inexpensive items. Ellison said transactions fell 3.1% year-over-year and the common ticket price fell 1%.
He told CNBC that customers bought fewer necessities like outdoor grills and patio sets and took on fewer projects like kitchen remodels.
Compared to Home Depot, Lowe’s does less business from painters, contractors and other do-it-yourselfers, who are likely to provide steadier business at the same time as do-it-yourself customers retreat. About half of Home Depot’s sales come from professionals, in comparison with about 20% to 25% at Lowe’s.
Still, Lowe’s has tried to win over more of those professionals. Gains amongst professionals and rising online sales helped partially offset the decline in spending on home improvement items.
Comparable sales fell 6.2% within the quarter. However, comparable sales for Pro customers remained flat within the quarter.
Lowe’s is currently overhauling last 12 months’s quarter, when the corporate dramatically reduced its full-year guidance and reported a year-over-year decline in sales. At the time, Ellison warned investors that the retailer expected “consumer spending to decline in the near future.”
In each of the three quarters since then, Lowe’s sales have also declined in comparison with the identical period last 12 months.
Shares of Lowe’s closed at $229.17 on Monday, bringing the corporate’s market value to $131.13 billion. As of Monday’s close, the corporate’s shares were up nearly 3% this 12 months, lagging the S&P 500’s 11% gains.
