Lowe’s (LOW) earnings Q1 2023

Lowe’s (LOW) earnings Q1 2023

A worker at Lowe’s Home Improvement Warehouse collects shopping carts in a parking lot on August 17, 2022 in Houston, Texas.

Brandon Bell | Getty Images News | Getty Images

lowes lowered its full-year outlook on Tuesday as lumber prices fell and home improvement customers bought fewer supplies.

The home improvement retailer lowered its guidance despite beating Wall Street’s sales and earnings expectations for the fiscal first quarter.

The company’s shares lost more than 1% in early trading.

Here’s what the company reported for the three-month period ended May 5, compared to Wall Street expectations, based on a Refinitiv analyst poll:

  • Earnings per share: $3.67 adjusted versus $3.44 expected
  • Revenue: $22.35 billion versus $21.6 billion expected

Lowe’s net income for the three-month period was $2.26 billion, or $3.77 per share, compared to $2.33 billion, or $3.51 per share, a year ago.

Net sales fell nearly 6% to $22.35 billion from $23.66 billion in the year-ago period, but it beat Wall Street expectations.

Comparable sales fell 4.3% in the fiscal first quarter. That’s less than the 3.4% decline Wall Street was expecting, according to StreetAccount.

The home improvement retailer said it now expects full-year sales to be between $87 billion and $89 billion, down from the $88 billion to $90 billion previously forecast. The company expects comparable sales to decline 2% to 4% this fiscal year, below the steady 2% decline previously mentioned.

Adjusted earnings per share will be between $13.20 and $13.60, down from the previous range of $13.60 to $14.00.

CEO Marvin Ellison said in the company’s press release that lumber deflation, inclement weather and reduced spending by DIY customers hurt quarterly sales. He said the lowered forecast reflected weaker than expected consumer demand.

Still, Lowe’s digital sales and comparable sales at home professionals were up in the first quarter compared to the same period last year, he added.

He said the company remains “optimistic about the medium to long-term prospects for home improvement and our ability to continue to grow market share.”

Lowe’s is the latest retailer to warn of slower sales as consumers become more frugal and less willing to spend on expensive items and necessities. Many other retailers including Walmart, Goal And home depotShe also noticed fewer non-needs purchases.

However, for Lowe’s and Home Depot, the time of year has additional significance. Spring is the prime selling season for home improvement items.

Businesses aren’t just competing for buyers’ money as higher food prices take more and more household budgets. They’re also grappling with a shift in demand as the tide of Covid-pandemic-driven home projects eases and consumers juggle other spending priorities like commuting, summer vacations and dining out.

lowe’s competitor, home depot, posted a rare drop in sales last week with its quarterly report. The company missed sales expectations for the second straight quarter and lowered its full-year guidance as customers ditched expensive items like grills and opted for smaller, less expensive home projects.

Like Lowe’s, Home Depot saw lower sales due to colder, wetter weather in the western US and falling lumber prices.

Lowe’s shares closed at $203.15 on Monday, taking the company’s market value to $121.15 billion. The company’s stock is up nearly 2% so far this year, lagging the S&P 500’s 9% gains.