Lowe’s reported first-quarter net income of $2.26 billion.
Lowe’s Companies posted first-quarter earnings and sales that topped analysts’ estimates but cut its outlook, citing falling lumber prices and a decline in do-it-yourself (DIY) discretionary spending.
The home improvement retailer reported its results less than a week after rival The Home Depot also lowered its full-year outlook. On the company’s earnings call, investors, CEO Marvin Ellison said Lowe’s expects a pullback in discretionary consumer spending over the near term. But looking further out, he was optimistic.
“Although we can’t predict the duration of what we think will be a more short-term turbulence, we think the medium and long-term health of this segment is incredibly strong,” he said.
Lowe’s reported net income of $2.26 billion, or $3.77 a share, for the quarter ended May 5, compared to income of $2.33 billion, or $3.51 a share, in the year-ago period. Adjusted earnings came to $3.67 a share, ahead of analysts’ estimates of $3.44 a share. (During the quarter, the company recognized a gain associated with the 2022 sale of its Canadian retail business.)
Total sales fell 5.5% to $22.35 billion, beating estimates of $21.60 billion. Same-store sales were down 4.3%, driven by lumber deflation, unfavorable weather and lower DIY discretionary sales. The decline was more than analysts expected but better than Home Depot’s first-quarter drop of 4.6%.
Online sales rose 6% during the quarter.
“We are pleased with the performance of our business despite record lumber deflation and unfavorable spring weather," stated Ellison, in the earning’s release. "Although we delivered positive comparable sales in Pro and online for the first quarter, we are updating our full-year outlook to reflect softer-than-expected consumer demand for discretionary purchases. We remain optimistic about the medium-to-long term outlook for home improvement and our ability to continue to grow market share.”
During the quarter, the company repurchased approximately 10.6 million shares for $2.1 billion, and it paid $633 million in dividends.
Based on higher-than-expected lumber deflation and lower-than-expected discretionary DIY sales, Lowe’s lowered its fiscal 2023 guidance ranges for adjusted earnings per share to $13.20 to $13.60 from $13.60 to $14.00. It now expects sales of $87 billion to $89 billion, down from its previous range from $88 billion to $90 billion. The outlook for same-store sales was revised to down 2% to down 4% from flat to down 2%.
Based in Mooresville, N.C., Lowe's operates more than 1,700 home improvement stores and has approximately 300,000 employees.