Lowe's off to soft start in Q1

Even with a double-digit sales increase, Lowe's Companies still managed to disappoint analysts with first quarter profit and comparable sales that missed their estimates.



Sales rose 10.7% to $16.9 billion, up from $15.2 billion in 2016. Same-store sales rose 1.9%, below the 2.6% increase expected by analysts polled by Consensus Metrix.



"The same-store numbers are perfectly respectable but are notably weaker than the figures Home Depot put out earlier in the month," commented Neil Saunders, managing director of GlobalData Retail. "In our view, Home Depot still has the edge when it comes to brand visibility with customers undertaking bigger hard-improvement projects — something that has served it well over the past few months."



Net earnings for the quarter ended May 5 came in at $602 million, down from $884 million in the year-ago period. This included a $464 million pre-tax loss on extinguishment of debt in connection with the company's previously announced $1.6 billion cash tender offer.



"A solid macroeconomic backdrop, combined with our project expertise, drove above average performance in indoor projects," said chairman, president and CEO Robert Niblock. "We also continued to advance our sales to Pro customers, delivering another quarter of comparable sales growth well above the company average."



Lowe's reaffirmed its outlook for 2017, though diluted earnings per share were updated to reflect the loss on extinguishment of debt. The outlook includes a total sales increase of approximately 5%, comparable store sales increase of 3.5%, and diluted earnings per share of approximately $4.30.



As of May 5, Lowe's operated 2,137 home improvement and hardware stores in the United States, Canada and Mexico, representing 213.8 million square feet of retail selling space.