Lowe's Companies Inc (NYSE:LOW) shares fell about 4% in early trading on Wednesday after the home improvement retailer reaffirmed a full-year outlook that came in slightly below Wall Street expectations, despite reporting first quarter earnings and revenue that topped analyst estimates.
Lowe’s continues to expect total sales of $92 billion to $94 billion versus Wall Street expectations of about $93.07 billion for the full year.
Adjusted EPS is expected to range from $12.25 to $12.75, compared with consensus estimates of roughly $12.59 at the midpoint.
The company reported adjusted earnings per share of $3.03 for the quarter ended May 1, ahead of the consensus estimate of $2.97.
Revenue rose to $23.08 billion from $20.9 billion a year earlier, exceeding analyst expectations of roughly $22.97 billion.
Comparable sales increased 0.6% during the quarter, supported by strong spring demand, a 15.5% increase in online sales, and continued strength in appliances, home services, and professional contractor sales.
Net earnings totaled $1.6 billion, or $2.90 per diluted share, compared with diluted EPS of $2.92 in the prior-year quarter. Lowe’s said results included $96 million in pre-tax expenses tied to its acquisitions of Foundation Building Materials and Artisan Design Group. Excluding those costs, adjusted diluted EPS increased 3.8% year over year.
Marvin Ellison, Lowe’s CEO, said strong execution and momentum in its Pro, Appliances, Online and Home Services segments “supported a solid start to the year.”
"In spite of a challenging housing macro, we remain focused on advancing our Total Home strategy to provide the best experience for our customer. I'd also like to thank our associates for their dedication to serving our customers throughout the busy spring season."
Jefferies analysts described the quarter as an “industry outperformance,” noting Lowe’s comparable sales growth matched Wall Street expectations and outpaced Home Depot’s performance when excluding foreign exchange benefits at its rival.
The firm highlighted Lowe’s e-commerce sales growth of more than 15%, compared with Home Depot’s 10% online growth, which analysts said may have been supported by an expanded online assortment.
Jefferies also pointed to continued momentum in the company’s professional contractor business and appliances category, where it said Lowe’s continued to gain market share despite a challenging broader backdrop.
The analysts noted gross margin of 32.7% exceeded consensus expectations of 32.4%, while operating margin of 11.5% also came in slightly ahead of forecasts.
“Press release indicates ‘strong Spring execution,’” Jefferies wrote, adding that it believes the first few weeks of May are likely tracking at least in line with Q1 trends.