Lowe’s Q1 revenue is $2235 billion, and the full-year performance guidance is weak
Lowe's Q1 revenue is $2235 billion, but full-year guidance is weak
BusinessDialogue learned that Lowe’s, the second largest home improvement retailer in the United States, lowered its sales and profit expectations for this year on Tuesday. The reason is due to the decrease in lumber prices, poor weather conditions, and a decrease in non-essential items purchased by DIY customers.
However, due to first-quarter revenue and profits exceeding Wall Street expectations, the company’s stock price rose nearly 2% on Tuesday’s close.
Lowe’s CEO Marvin Ellison said during the earnings conference call that he expects “recent non-essential spending to decline”. However, he said Lowe’s is in a better position than other retailers. Two-thirds of its sales in the first quarter came from non-essential categories such as household appliances.
The financial report shows that the company’s revenue for the first quarter was $22.35 billion, a decrease of nearly 6% year-on-year, but exceeded the market’s expected $21.6 billion; net profit was $2.26 billion, compared with $2.33 billion in the same period last year; diluted earnings per share were $3.77, compared with $3.51 in the same period last year; adjusted earnings per share were $3.67, exceeding the market’s expected $3.44.
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However, in the first quarter, Lowe’s same-store sales fell by 4.3%, higher than Wall Street’s expected 3.4% decline.
Lowe’s is the latest retailer to warn of slowing future sales, with other retailers including Walmart, Target, and Home Depot previously reporting that due to the pressure of living costs, consumers are becoming more frugal, and purchases of essential categories are decreasing.
Looking ahead, Lowe’s expects total annual sales to be between $87 billion and $89 billion, lower than the previous forecast of $88 billion to $90 billion; same-store sales are expected to decline by 2% to 4%, lower than the previous forecast of flat to 2% decline; adjusted earnings per share will be between $13.20 and $13.60, lower than the previous range of $13.60 to $14.00.
Last week, Home Depot, Lowe’s competitor, reported lower-than-expected revenue for the first quarter. The company failed to meet sales expectations for the second consecutive quarter as consumers turned away from buying large items such as grills and instead focused on smaller and lower-priced home products. The company also lowered its annual guidance.
Similarly to Lowe’s, Home Depot attributed the decline in sales to the cold and wet weather in the western United States and the drop in lumber prices.
Marvin Ellison also stated that online sales in the first quarter of 2023 increased by 6% compared to the same period last year as more home renovation professionals chose to shop on Lowe’s website. He expects that sales from home renovation professionals will surpass DIY shoppers for the remainder of this year.
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