An exterior view of a Lowe’s home improvement store at the Buckhorn Plaza shopping center.
Paul Tisserand | Light flare | Getty Images
Lowes surpassed Wall Street’s quarterly results and revenue expectations Tuesday, even as DIY customers bought fewer big-ticket items.
The home improvement retailer’s results echo those of Home deposit last week. Home Depot missed revenue expectations, which it attributed to a tougher housing market and a delayed start to spring.
Lowe’s remains stuck on its full-year guidance. It said it expects total sales to be between $84 billion and $85 billion, which would be down from $86.38 billion in fiscal 2023. It expects comparable sales to decline between 2 and 3% from the previous year and expects earnings per share of around $12 to $12.30.
In an interview with CNBC, Marvin Ellison said a combination of factors have kept consumers from spending more freely, including pressure from inflation and uncertainty about when the Federal Reserve might cut interest rates .
“Interest rates can fall, but consumer confidence still needs to rise,” he said.
He added that Lowe’s had held back from raising its outlook for the full year, awaiting some of its biggest sales days. Spring is the holiday season for home improvement.
Here’s what the company reported for the fiscal first quarter compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $3.06 versus $2.94 expected
- Income: $21.36 billion versus $21.12 billion expected
In the three months ended May 3, Lowe’s net income fell to $1.76 billion, or $3.06 per share, from $2.26 billion, or $3.77 per share. action, a year earlier.
Sales fell from $22.35 billion a year ago. This marks the fifth consecutive quarter that Lowe’s has posted a year-over-year sales decline.
Shoppers were visiting Lowe’s stores and website less as homeowners postponed larger projects and purchased fewer big-ticket items. Transactions fell 3.1% and the average ticket fell 1% year-over-year, Ellison said.
He told CNBC that customers were buying fewer discretionary items, such as outdoor grills and patio sets, and taking on fewer projects like kitchen remodels.
Compared to Home Depot, Lowe’s gets less of its business from painters, contractors and other home professionals who tend to provide steadier business even when DIY customers pull out. About half of Home Depot’s sales come from professionals, compared to about 20 to 25 percent at Lowe’s.
Still, Lowe’s is working to win business from more of these professionals. Gains from professionals and growth in online sales helped partially offset the decline in DIY spending.
Comparable sales for the quarter decreased 6.2%. For professional customers, on the other hand, comparable sales remained stable for the quarter.
Lowe’s is behind last year’s quarter, when the company lowered its full-year outlook and reported a year-over-year decline in sales. At the time, Ellison warned investors that the retailer expected “a pullback in discretionary consumer spending in the near term.”
Since then, for each of the three quarters, Lowe’s sales have also declined compared to last year’s periods.
Lowe’s shares closed Monday at $229.17, bringing the company’s market value to $131.13 billion. As of Monday’s close, the company’s shares were up nearly 3% this year, trailing the S&P 500’s 11% gains.
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