Lowe's Companies Inc (NYSE:LOW) saw its shares drop approximately 4% in early trading on Wednesday, even though the home improvement retailer reported first-quarter earnings and revenue that exceeded analyst expectations.
The decline came as Lowe's reaffirmed its full-year outlook, which landed slightly below Wall Street predictions, according to Detik Finance.
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Full-Year Guidance Falls Short
For the full year, Lowe's continues to anticipate total sales ranging between $92 billion and $94 billion.
This projection compares to Wall Street estimates that hover around $93.07 billion.
Adjusted EPS is projected to fall between $12.25 and $12.75.
This range sits against consensus estimates of approximately $12.59 at the midpoint.
Q1 Results Beat Expectations
The company posted adjusted earnings per share of $3.03 for the quarter ended May 1, which outpaced the consensus estimate of $2.97.
Revenue climbed to $23.08 billion from $20.9 billion in the previous year, surpassing analyst expectations of around $22.97 billion.
Comparable sales edged up 0.6% during the quarter.
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This growth was driven by robust spring demand, a 15.5% surge in online sales, and sustained strength across appliances, home services, and professional contractor sales.
Net earnings reached $1.6 billion, or $2.90 per diluted share, down from a diluted EPS of $2.92 in the prior-year quarter.
Lowe's noted that these results factored in $96 million in pre-tax expenses connected to purchasing Foundation Building Materials and Artisan Design Group.
Excluding those specific costs, adjusted diluted EPS grew 3.8% year over year.
CEO Comments and Analyst Reactions
Marvin Ellison, Lowe's CEO, noted that strong execution and momentum across 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," Ellison said.
He also thanked associates for their dedication during the busy spring season.
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Analysts from Jefferies characterized the quarter as an "industry outperformance."
The firm observed that the comparable sales growth at Lowe's matched Wall Street expectations and outperformed Home Depot's performance when excluding foreign exchange advantages at its competitor.
Jefferies highlighted that e-commerce sales growth at Lowe's exceeded 15%, compared to the 10% online growth recorded by Home Depot.
Analysts indicated this might have been aided by a broader online product assortment.
Jefferies also pointed toward ongoing momentum within the company's professional contractor business and appliances sector.
The firm stated that Lowe's managed to capture market share despite facing a difficult broader economic backdrop.
The analysts remarked that the gross margin of 32.7% beat consensus expectations of 32.4%, while the operating margin of 11.5% also finished slightly ahead of projections.
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"Press release indicates 'strong Spring execution,'" Jefferies wrote, noting its belief that the opening weeks of May are likely tracking at least in line with first-quarter trends.
