Lowe’s maintained its full-year guidance on Wednesday, supported by growing sales to home professionals that helped balance softer demand from do-it-yourself customers.
The home improvement retailer narrowly missed Wall Street’s revenue expectations for the latest quarter but exceeded earnings forecasts.
Lowe’s reported earnings per share (EPS) of $2.92, above the expected $2.88, while revenue came in at US$20.93 billion, just under the forecast of $20.94 billion.
In a statement, CEO Marvin Ellison attributed the company’s resilience to strategic investments in technology, inviting store environments and customer service, which have allowed Lowe’s to weather “near-term uncertainty and housing market headwinds”.
High interest rates and reduced housing turnover have weighed on consumer appetite for large-scale home improvement projects. Still, Lowe’s expects to return to growth this year, albeit modestly.
The company projects full-year revenue between $83.5 billion and $84.5 billion, with comparable sales expected to be flat or up by 1%. Full-year earnings per share are forecast to range from $12.15 to $12.40.
For the fiscal first quarter ended 2 May, Lowe’s posted net income of $1.64 billion, while comparable sales declined 1.7% year over year, with unfavourable weather cited as a drag on demand.
However, online sales and sales to professional contractors rose during the quarter.
Ellison noted in the earnings call that sales to home professionals grew by mid-single-digits, driven by long-term investments in merchandise assortment and a loyalty programme tailored to professionals.
As weather conditions improved, so did in-store traffic for seasonal items such as grills, patio furniture, garden supplies, and outdoor power tools.
Compared to broader retail trends, Lowe’s customers - primarily homeowners - remain in relatively stable financial positions. Despite this, Ellison acknowledged that many continue to defer major purchases and home projects.
Chief Financial Officer, Executive Vice President Brandon Sink noted, “We've yet to really see at scale the consumer reengage in larger discretionary categories still mainly sitting on the sidelines.”
He added that the company is watching for “the inflection point” when discretionary spending picks up, but does not expect that shift to happen in the current fiscal year.
Ellison also outlined Lowe’s sourcing diversification strategy, noting that roughly 60% of its purchases are from the U.S., with only about 20% sourced from China. The company is working to further reduce its reliance on Chinese imports.
“Our global sourcing team has identified exciting diversification opportunities in the U.S. and around the globe that we're actively pursuing,” Ellison said.
At the time of writing, Lowe’s (NYSE: LOW) stock was trading at US$227.37, easing 1.7% from Tuesday's close of $231.25. Lowe’s market cap stands at US$127.26 billion.
