Lowe’s on Wednesday it reported quarterly results that beat both top and bottom expectations and confirmed its full-year outlook.
Revenue jumped nearly 10% compared to last year. Comparable sales rose 0.6% in the quarter, driven by what Lowe’s said was its spring performance and a 15.5% increase in online sales.
“About 60% to 65% of our revenue comes from the do-it-yourself customer, and this has been a really tough housing market, so to do four consecutive quarters of positive coms, we’re excited about that,” CEO Marvin Ellison told CNBC.
Here’s how the company performed in its first fiscal quarter compared to Wall Street estimates, according to a survey of analysts by LSEG:
- Earnings per share: $3.03 adjusted versus $2.97 expected
- Net worth: $23.08 billion compared to $22.97 billion expected
The company’s shares dipped slightly in morning trading.
For the three months ended May 1, Lowe’s reported net income of $1.63 billion, or $2.90 per share, down slightly from $1.64 billion, or $2.92 per share, in the prior period. Excluding one-time items such as acquisition costs, the company reported adjusted earnings per share of $3.03.
Lowe said the strength of appliances, home appliances and selling to home professionals such as contractors also contributed to its performance.
“While DIY demand remains under pressure, we continue to grow market share in a challenging housing environment created by high interest rates, high costs and low housing affordability,” Ellison said on a call with analysts Wednesday. “While we expect the broader market to remain subdued through 2026, our focus is on the proper execution of our domestic strategy, which drives growth regardless of market conditions.”
Despite rising gas prices affecting consumer sentiment and discretionary spending, Ellison told CNBC that Lowe’s primary homeowner customer is largely unaffected by gas prices. Still, a combination of rising fuel prices and “broader concerns” is driving sentiment down, he said.
“The year plays out in terms of where we predict and when we give our guidance, and we try to adjust our approach,” he said.
Ellison said in an analyst call that the company sees a dynamic K-shaped economic game, where high-income consumers spend more and low-income consumers cut back on their spending.
“We have a history of doing well, managing costs and finding ways to increase sales, regardless of size, and we plan to share this quarter,” he said.
The company reaffirmed its full-year guidance, expecting net sales between $92 billion and $94 billion, an increase of between 7% and 9% compared to last year. Comparable sales are expected to be down up to 2% compared to last year.
Lowe’s said it expects adjusted earnings per share between $12.25 and $12.75 for the full year.
Earnings meet housing market problems and consumer caution as gas prices rise.
“I think overall, these have been the toughest housing markets I’ve been in this business since the financial crisis,” Ellison said on the phone.
He told CNBC that he believes interest rates need to come down to allow buyers more flexibility with their home improvement projects.
“I think the main thing that we need to see is that the prices are just going down, 30 years fixed and temporary,” he said. “If we see that happen, and I think what we’re talking about is a sustainable situation of less than 6%, we think that will start to loosen this category.”
Lowe’s senior vice president of merchandising, Bill Boltz, said Wednesday that the company’s primary consumer “remains busy” with repair and maintenance programs.
Company officials said on the call that high oil prices are also putting pressure on the company. Although the impact in the first quarter was minimal, they said the current quarter is seeing more challenges.
In February, Lowe’s cut about 600 business and support roles as the company said it wanted to focus more on its store staff and streamline its services.
Earlier this week, Lowe’s rival The Home Depot said its core consumer remained strong as it confirmed its full-year guidance and beat Wall Street expectations. The seller also said he applied for a refund, which he said would help reduce fuel costs.
Ellison told CNBC that Lowe’s has not publicly said whether it is filing for a refund, but is keeping a close eye on the situation as “there’s still a lot to be learned.”
