Lowe’s, the home improvement retailer, reported better-than-expected earnings and revenue for the first quarter of the fiscal year. Despite a decrease in sales, Lowe’s managed to surpass Wall Street’s expectations, similar to its competitor Home Depot. However, Home Depot attributed its missed revenue expectations to a tougher housing market and a delayed start to spring.
Lowe’s remains confident in its full-year forecast, expecting total sales between $84 billion and $85 billion, a slight drop from fiscal 2023. The company also anticipates a decline in comparable sales of 2% to 3% compared to the previous year. Additionally, Lowe’s expects earnings per share of approximately $12 to $12.30.
In the three-month period ending on May 3, Lowe’s experienced a decrease in net income to $1.76 billion, or $3.06 per share, compared to $2.26 billion, or $3.77 per share, the previous year. Sales also dropped from $22.35 billion in the same period last year. This marks the fifth consecutive quarter that Lowe’s has reported a year-over-year sales decline.
Compared to Home Depot, Lowe’s relies less on painters, contractors, and other home professionals for its business. These professionals typically provide steadier business even when do-it-yourself customers reduce their spending. Approximately half of Home Depot’s sales come from professionals, while only about 20% to 25% of Lowe’s sales are from this segment.
However, Lowe’s has been actively trying to attract more professional customers. According to CEO Marvin Ellison, gains with professionals and online sales growth have helped offset the decline in do-it-yourself spending. The company recognizes the importance of diversifying its customer base and reducing its reliance on individual consumers.
It is worth noting that Lowe’s is facing tough comparisons to the previous year when the company slashed its full-year outlook and experienced a year-over-year sales decline. CEO Marvin Ellison had warned investors about the expected pullback in discretionary consumer spending at that time. Since then, Lowe’s has reported sales declines for each of the three subsequent quarters.
In terms of stock performance, Lowe’s shares closed at $229.17 on Monday, bringing the company’s market value to $131.13 billion. While the stock has gained nearly 3% this year, it lags behind the 11% gains of the S&P 500.
Overall, Lowe’s ability to exceed expectations in earnings and revenue despite a challenging market indicates its resilience and strategic efforts to attract professional customers and drive online sales. By diversifying its customer base and focusing on growth areas, Lowe’s aims to overcome the current sales decline trend and maintain its position in the competitive home improvement market.
