Lowe’s Home Improvement Warehouse workers collect carts in a parking lot in Houston, Texas, on Aug. 17, 2022.
Brandon Bell | Getty Images News | Getty Images
Lowe’s The company cut its full-year outlook on Tuesday as lumber prices fell and do-it-yourself customers bought fewer discretionary items.
Even though it beat Wall Street’s revenue and earnings expectations for the fiscal first quarter, it lowered its forecast.
Shares of the company fell in premarket trading.
Here’s how the home improvement retailer reported for the three-month period ended May 5 compared to Wall Street expectations, according to a Refinitiv survey of analysts:
- Earnings per share: $3.67 adjusted vs. $3.44 expected
- Revenue: $22.35 billion vs. $21.6 billion expected
Lowe’s net income for the three months was $2.26 billion, or $3.77 a share, compared with $2.33 billion, or $3.51 a share, a year earlier.
Net sales fell nearly 6 percent to $22.35 billion from $23.66 billion a year earlier, but beat Wall Street expectations.
Comparable sales fell 4.3% in the fiscal first quarter. That was below Wall Street expectations for a 3.4% drop, according to StreetAccount.
The home improvement retailer said it now expects total full-year sales of between $87 billion and $89 billion, down from its previous forecast of $88 billion to $90 billion. The company said it expects comparable sales to decline 2% to 4% for the fiscal year, down from a flat to 2% decline it had previously said.
Adjusted earnings per share will be between $13.20 and $13.60, down from a previous range of $13.60 to $14.00, the company said.
Lumber deflation, unfavorable weather and lower spending by DIY customers hurt quarterly sales, CEO Marvin Ellison said in a company news release. He said the lower forecast reflected weaker-than-expected consumer demand.
However, Lowe’s digital sales and its comparable sales among home professionals rose in the first quarter compared with a year earlier, he added.
He said the company remained “optimistic about the medium to long-term prospects for home improvement and our ability to continue to grow our market share.”
Lowe’s is the latest retailer to warn of slower sales ahead as consumers become more frugal and shy away from big-ticket and discretionary purchases.many other retailers, including walmart, Target and The Home Depotalso noticed a drop in purchases other than essentials.
However, for Lowe’s and Home Depot, this time of year is even more important. Spring is the biggest sales season for home improvement.
These companies aren’t just competing for shoppers’ dollars, as higher grocery prices eat up more of household budgets. They are also dealing with a shift in demand as the boom in home projects fueled by the coronavirus pandemic fades and consumers juggle other spending priorities such as commuting, summer vacations and eating out at restaurants.
Lowe’s competitor, The Home Depot, posted a rare revenue miss in its quarterly report last week. The company missed sales expectations for the second straight quarter and lowered its full-year forecast as customers skipped big-ticket items like grills in favor of smaller, lower-priced household items.
Like Lowe’s, Home Depot attributed the drop to cold, rainy weather in the western U.S. and lower lumber prices.
Shares of Lowe’s closed at $203.15 on Monday, giving the company a market value of $121.15 billion. Its shares are up nearly 2 percent so far this year, trailing the S&P 500’s 9 percent gain.