Lowe’s (LOW) Q1 2023 results

Lowe’s cut its full-year outlook on Tuesday as lumber prices fell and DIY customers bought fewer discretionary items.

It lowered its forecast even as it beat Wall Street’s revenue and profit expectations for the fiscal first quarter.

Shares of the company plunged in premarket trading.

Here’s what the home improvement retailer reported for the three months ended May 5 compared to what Wall Street expected, based on a Refinitiv analyst survey:

• Earnings per share: $3.67 adjusted vs. $3.44 expected
• Revenue: $22.35 billion vs. $21.6 billion expected

Lowe’s net income for the three-month period was $2.26 billion, or $3.77 per share, compared with $2.33 billion, or $3.51 per share, a year earlier.

Net sales fell nearly 6% to $22.35 billion from $23.66 billion a year ago, but beat Wall Street expectations.

Comparable sales fell 4.3% in the first fiscal quarter. That’s lower than the 3.4% drop expected by Wall Street, according to StreetAccount.

The home improvement retailer said it now expects total full-year sales to be between $87 billion and $89 billion, down from the $88 billion to $90 billion it had previously planned. He said he expects comparable sales to decline 2% to 4% this fiscal year, below the 2% drop he had previously forecast.

It said adjusted earnings per share would be between $13.20 and $13.60, below its previous range of $13.60 to $14.00.

CEO Marvin Ellison said in the company’s press release that lumber deflation, inclement weather and lower spending by DIY customers hurt quarterly sales. He said the lowered forecast reflects weaker-than-expected consumer demand.

Still, he added, Lowe’s digital sales and comparable sales to home professionals increased in the first quarter compared to the year-ago period.

He said the company remained “optimistic about the medium to long-term outlook for home improvement and our ability to continue to grow market share.”

Lowe’s is the latest retailer to warn of a slowdown in sales ahead as consumers become more frugal and reluctant to spend on big-ticket and discretionary items. Many other retailers including walmart, Target And Home depositalso noticed fewer purchases outside of basic necessities.

For Lowe’s and Home Depot, however, the time of year adds significance. Spring is the biggest sales season for home improvement.

Businesses aren’t just competing for shoppers’ money, as higher grocery prices take up a bigger chunk of household budgets. They are also facing a shift in demand, as the wave of household projects fueled by the Covid pandemic fades and consumers juggle other spending priorities, such as commuting, holidays summer and restaurant meals.

Lowe’s competitor, Home deposit, recorded a rare revenue loss with its quarterly report last week. The company fell short of sales expectations for the second straight quarter and cut its full-year guidance as customers skipped big-ticket items like grills and opted for smaller, home projects. cheaper.

Like Lowe’s, Home Depot also attributed lower sales to colder, wetter weather in the western United States and lower lumber prices.

Shares of Lowe’s closed Monday at $203.15, bringing the company’s market value to $121.15 billion. Its stock is up nearly 2% so far this year, lagging the S&P 500’s 9% gains.