Lowe's Q1 Same-Store Sales Decline 1.7%, Beats EPS Estimates

Lowe's Companies, Inc. (LOW.US), a prominent home improvement retailer, reported better-than-expected same-store sales for the first quarter, despite a weakening consumer confidence and economic volatility. The company's same-store sales decreased by 1.7% for the quarter ending May 2, but it still expects the key sales metric to remain flat or grow by up to 1% for the full year. The company's revenue for the quarter was $20.93 billion, a 2.2% decrease year-over-year, falling short of market expectations. However, its earnings per share of $2.92 exceeded market expectations by $0.05.

The decrease in same-store sales was partially attributed to unfavorable weather conditions at the beginning of the quarter. However, growth in online sales and the professional contractor (Pro) business segment offset some of this impact. Lowe's and its main competitor have shown that despite economic uncertainty, consumers have not significantly reduced or altered their home spending. While high interest rates have caused many to delay large projects, they continue to undertake smaller renovations. This has helped both companies' performances to meet or slightly exceed expectations.

Lowe's management noted that the worst of the economic scenario seems to have passed, and with a diversified supply chain, the company expects to maintain current price levels overall. Spending remains stable, and there has been limited stockpiling behavior due to tariffs. However, the frequent changes in tariff policies are expected to bring more challenges to the industry. Product prices are expected to rise, and consumer confidence has weakened in recent weeks due to concerns about the impact of tariffs on the economy. The home goods category is particularly vulnerable to tariffs, as many products rely on overseas sourcing and are non-essential items, meaning demand is closely tied to price.

Lowe's has focused on enhancing its services for professional contractors, who handle large projects, and has increased its investment in online business. The company expects total sales to be between $83.5 billion and $84.5 billion by 2025, while the market consensus is $84.31 billion. It also expects comparable sales to be flat or grow by 1% compared to the previous year. As of May 2, Lowe's operates 1,750 stores with a retail area of 195.3 million square feet.