Lowe’s said Wednesday that fiscal first-quarter sales rose 24%, outpacing Wall Street expectations, as consumers continued to invest in their homes and sales picked up among home professionals, such as contractors.
The home improvement retailer said momentum continued into May. Based on these trends, it said it’s tracking ahead of its prior sales forecast of $86 billion this fiscal year.
Despite its strong quarter, shares fell nearly 3% in premarket trading as investors worried that the labor shortage could slow down the housing market.
Here’s what the company reported for the fiscal first quarter ended April 30 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $3.21 vs. $2.62 expected
- Revenue: $24.42 billion vs. $23.86 billion expected
Lowe’s reported first-quarter net income of $2.33 billion, or $3.21 per share, up from $1.34 billion, or $1.76 per share, a year earlier. The results outpaced the $2.62 per share expected by analysts surveyed by Refinitiv.
Net sales rose to $24.42 billion from $19.68 billion last year, higher than analysts’ expectations of $23.86 billion.
Lowe’s same-store sales grew by 25.9% in the quarter. That’s higher than the growth of 20.3% that Wall Street expected, according to a survey by StreetAccount.
For some analysts, however, that sharp trajectory wasn’t good enough. Zack Fadem, a senior equity analyst for Wells Fargo, said in a research note that some had expected to see growth in the upper 20% to low 30% range.
At rival Home Depot, sales soared by nearly 33% in the first quarter, but the retailer declined to provide a forecast. Its shares fell on Tuesday and were down about 1% in Wednesday’s premarket.
Both home improvement players have benefited from the booming real estate market, but they face new challenges. Demand for homes remains high, but a labor crunch, rising lumber prices and land shortage is making it difficult for construction to keep up. Single-family housing starts dropped more than 13% in April compared with March, the U.S. Census reported Tuesday. That’s the sharpest decline since April 2020, when the pandemic shut down the economy.
Lowe’s is also going up against big numbers in the fiscal year. It kept stores open during lockdowns last year as an essential retailer. As customers stayed at home, they took on do-it-yourself projects, replaced kitchen appliances and spruced up their lawns or backyards. Some investors are skeptical that will continue as people dine out, go on vacation and spend their time in other ways.
As of Tuesday’s close, Lowe’s shares have risen about 20% this year. Its shares closed at $192.75 on Tuesday, bringing its market value to $138.24 billion.
Read the full press release here.
Source: Business - cnbc.com
