Lowe’s reported a strong first quarter with sales and profit that beat analyst expectations — and with same-store sales growth that beat rival Home Depot.
The home improvement retailer’s net income rose 27.6% to $1.34 billion, or $1.76 per share, for the quarter ended May 1, compared to earnings of $1.05 billion, or $1.31 per share, a year ago. Excluding items, the company earned $1.77 per share, easily beating analyst expectations of $1.32 per share.
Revenue rose 10.9% to $19.68 billion. Lowe’s U.S. comparable sales increased 12.3%. Rival Home Depot on Tuesday reported a 7.5% increase in first-quarter same-store sales.
In an interview with CNBC, Lowe's CEO Marvin Ellison attributed the chain's strong sales gains to several factors, including its large base of DIY customers who upped their home improvement projects during the pandemic even as big construction and renovation projects slowed. (Compared to Home Depot, Lowe’s has a higher percentage of DIY customers and a lower percentage of professional homebuilders and contractors.)
In other advantages, Ellison said about 25% of its stores are in rural areas, which were less impacted by the health crisis than other areas, and many of its professional customers are “pickup truck pros” who operate small businesses that haven't been as hard hit, CNBC said.
Similar to other retailers whose stores remained open during the pandemic, Lowe’s has been hit with additional costs during the pandemic. The retailer put its COVID-19 related first-quarter costs, which include expanded pay, bonuses and benefits along with in-store measures to promote employee and customer safety, at $340 million.
Commenting on Lowe’s “excellent” first-quarter performance, Neil Saunders, managing director of GlobalData Retail, noted that Lowe’s, despite increases in costs, managed to lift both operating profits and net income — with the latter up by 27.8% over the prior year.
Lowe’s has been working to re-energize its business, including enhancing its digital operations, under the direction of Ellison. In a statement, Ellison said as Lowe’s pivoted to serve increased demand during the quarter, its online sales increased 80%.
“Our strong first-quarter performance, which continues into May, also reflects the benefits of our retail fundamentals strategy, the improvement in our execution, and the resiliency of our home improvement business model,” he said.
Saunders said that the improvements Ellison and his team made before the COVID-19 crisis hit ensured that Lowe’s operations remained steady during the quarter.
“Without these measures we believe that Lowe’s would have struggled to cope both in terms of dealing with capacity increases and maintaining stock levels,” said Saunders. “This is a testament to the work done so far and it bodes well for the future.” For more analysis, click here.
Lowe’s said it is withdrawing its full-year 2020 guidance due to uncertainty related to the coronavirus pandemic
As of May 1, 2020, Lowe's operated 1,970 home improvement and hardware stores in the United States and Canada.