Lowe’s reaffirmed its full-year financial forecast on Wednesday, signaling confidence in its business strategy despite ongoing challenges in the housing and home improvement markets. The retail giant narrowly missed Wall Street’s revenue expectations for its fiscal first quarter but surpassed earnings projections, prompting a nearly 3% rise in premarket trading. CEO Marvin Ellison attributed the company’s resilience to continued investments in store upgrades, technology, and customer service, which he said were helping Lowe’s navigate “near-term uncertainty and housing market headwinds.”
High interest rates and reduced home sales activity have weakened consumer enthusiasm for large-scale renovations, particularly among do-it-yourself (DIY) shoppers. However, Lowe’s earning expects to reverse this sales slump over the course of the year. The company’s full-year guidance anticipates total sales between $83.5 billion and $84.5 billion, with comparable sales forecast to be flat to up 1% year over year, and earnings per share ranging from $12.15 to $12.40.
Home Professionals Help Balance Softer DIY Demand
In the fiscal first quarter ending May 2, Lowe’s earning reported net income of $1.64 billion, or $2.92 per share, down from $1.76 billion, or $3.06 per share, a year ago. Revenue came in at $20.93 billion, just under the expected $20.94 billion, according to analyst estimates from LSEG. The company also noted a 1.7% decline in comparable sales year over year.
Unfavorable weather conditions partly contributed to the drop in foot traffic and DIY-related purchases, but the company saw growth in digital sales and spending from home professionals. These commercial clients, who typically undertake larger and more frequent projects, have become a critical segment for Lowe’s amid lagging consumer activity.
This strategic shift mirrors moves made by competitor Home Depot, which also reaffirmed its full-year outlook earlier this week and reported a decline in comparable sales. However, Home Depot received a substantial boost from its recent acquisition of SRS Distribution, a supplier to professional contractors in roofing, landscaping, and pools.
Strategic Acquisitions to Strengthen the Pro Customer Base
To further enhance its appeal among professional builders and property managers, Lowe’s announced in April its planned acquisition of Artisan Design Group in a $1.3 billion deal. The company provides design services and installs flooring, cabinets, and countertops for residential developers and commercial property managers a move that is expected to deepen Lowe’s relationships with its growing pro customer base.
The emphasis on professional clientele is a calculated move by both Lowe’s and Home Depot to mitigate the volatility of consumer spending and weather broader economic uncertainty. While DIY enthusiasm has cooled due to inflation and high borrowing costs, professional clients continue to spend on development and renovation projects, offering a more stable source of revenue.
By bolstering its offerings and services to home professionals, Lowe’s earning is positioning itself to outlast the slowdown in the DIY sector and rebound in the latter half of the year, aligning with its full-year forecast and long-term growth goals.
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