Lowe's sales disappoint as late spring hurts seasonal demand
U.S. housing boom is showing signs of cooling due to rising mortgage rates, while sales to DIY customers have slowed significantly with more people returning to offices
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Lowe's Cos Inc. reported a bigger-than-expected drop in same-store sales on Wednesday, as cold and wet weather during April hit demand for seasonal goods.
Same-store sales decreased 4% in the first quarter ended April 29, compared with Wall Street's expectation of a 2.5% fall.
Seasonal goods account for 35% of Lowe's first quarter, meaning the cooler weather will impact the company more than it affected Home Depot Inc, D.A. Davidson wrote in a note, ahead of the earnings report.
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Lowe's is also dependent on do-it-yourself (DIY) customers for sales. The return of people to offices is affecting demand from DIY customers.
"Because 75% of our customer base is DIY, our Q1 sales were disproportionately impacted by the cooler spring temperatures," Chief Executive Officer Marvin Ellison said in a statement.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LOW | LOWE'S COMPANIES INC. | 259.39 | -12.48 | -4.59% |
Home Depot executives said on Tuesday more customers would buy seasonal goods at its stores in the current quarter after its seasonal categories posted a double-digit decline in comparable sales for the first quarter.
Lowe's also reaffirmed its fiscal 2022 outlook.
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In contrast, Home Depot posted a surprise rise in quarterly comparable sales and increased its annual forecasts, saying growth in sales to professionals including builders and handymen outpaced that to DIY customers.
Lowe's shares, down 25% this year, fell 1.6% in premarket trading.
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Net earnings edged higher to $2.33 billion, or $3.51 per share, from $2.32 billion, or $3.21 per share, a year earlier. Analysts had expected $3.22 per share, according to IBES data from Refinitiv.
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(Reporting by Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila)