Lowe's Companies, Inc. (NYSE:LOW) has reported a dip in first-quarter sales and has cut its full-year forecast due to the impact of record lumber deflation, bad weather and softer-than-expected consumer demand.
The home improvement retailer reported total sales of $22.3 billion for the quarter to May 5, 2023, with comparable sales falling by 4.3%. It also attributed the decline to lower DIY discretionary sales. Net earnings for the quarter amounted to $2.3 billion, or $3.77 per diluted share, up from diluted earnings per share (EPS) of $3.51 in the first quarter of 2022.
The company said it benefited from a gain associated with the 2022 sales of its Canadian retail business, which added $0.10 to diluted EPS. Excluding the benefit, diluted EPS was 5% higher at $3.67, beating the consensus forecast for EPS of $3.48.
"We are pleased with the performance of our business despite record lumber deflation and unfavorable spring weather,” chairman, president and CEO Marvin Ellison said in the results statement.
“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.”
The company now expects full-year sales of between $87 billion and $89 billion, down from its previous forecast of $88 — $90 billion. Comparable sales are likely to be 2% to 4% lower, while adjusted diluted EPS of $13.20 to $13.60 is below its prior guidance of $13.60 to $14.
“We remain optimistic about the medium-to-long term outlook for home improvement and our ability to continue to grow market share through our Total Home strategy,” Ellison added.
Contact the author at stephen.gunnion@proactiveinvestors.com