Lowe’s Q1 Results Exceed Expectations Amidst DIY Slowdown

Lowe’s (LOW) Q1 revenue surpassed expectations, reaching $21.36 billion, despite a decrease in DIY projects. This figure is slightly higher than the anticipated $21.13 billion. The company’s same-store sales saw a 4.1% decline, a minor improvement from the 4.3% drop in Q1 last year.

Lowe’s noted a decrease in everyday customers’ purchases of big-ticket items. However, this was partially countered by increased sales in the Pro and online segments. CEO Marvin Ellison attributed the Q1 success to “strong execution and enhanced customer service,” including the launch of a national DIY loyalty program and same-day delivery expansion.

Ellison stated that the Total Home strategy, which aims to provide a comprehensive range of products for DIYers and professionals, has contributed to the growth in the Pro and online segments. The company’s adjusted earnings per share were $3.06, exceeding the expected $2.95 but lower than the $3.67 from the same period last year.

Telsey Advisory Group’s Joe Feldman maintained a Hold rating on Lowe’s, citing industry challenges such as a weak housing market, consumer caution in spending, particularly on significant projects, and the normalization of pandemic-related gains. However, Feldman suggested that focusing on serving professionals, enhancing digital services, improving installation services, and elevating product assortment could drive growth.

Lowe’s, with a 75% DIY customer base, contrasts with Home Depot’s 25%. In Home Depot’s recent earnings call, executives highlighted a consumer shift toward services, a slower housing market due to higher mortgage rates, and unfavorable weather conditions delaying the spring selling season.

Lowe’s shares saw a pre-market increase of nearly 3%, and year-to-date, the shares are up 3%, trailing the S&P 500’s 11% gain. The company reaffirmed its 2024 outlook, projecting total sales of $84 to $85 billion and a 2% to 3% year-over-year decline in same-store sales.