Lowe’s (LOW) earnings Q1 2023

Lowe’s cut its full-year outlook Tuesday, as lumber prices fell and do-it-yourself customers bought fewer discretionary items.

It lowered its forecast even as it beat Wall Street’s revenue and earnings expectations for the fiscal first quarter.

The company’s shares dipped in premarket trading.

Here’s what the home improvement retailer reported for the three-month period ended May 5 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $3.67 adjusted vs. $3.44 expected
• Revenue: $22.35 billion vs. $21.6 billion expected

Lowe’s net income for the three-month period was $2.26 billion, or $3.77 per share, compared with $2.33 billion, or $3.51 per share, a year earlier.

Net sales fell nearly 6% to $22.35 billion from $23.66 billion in the year-ago period, but exceeded Wall Street’s expectations.

Comparable sales dropped 4.3% in the fiscal first quarter. That’s lower than the 3.4% decline that Wall Street expected, according to StreetAccount.

The home improvement retailer said it now expects total sales for the full year to range between $87 billion and $89 billion, lower than the $88 billion to $90 billion it had previously forecast. It said it projects comparable sales to decline by 2% to 4% this fiscal year, below the flat to down 2% that it had said before.

It said adjusted earnings per share will range between $13.20 and $13.60, below its previous range of $13.60 to $14.00.

CEO Marvin Ellison said in the company’s news release that lumber deflation, unfavorable weather and lower spending by DIY customers hurt quarterly sales. He said the lowered forecast reflects weaker-than-expected consumer demand.

Yet, he added, Lowe’s digital sales and its comparable sales among home professionals rose in the first quarter compared with the year-ago period.

He said the company remains “optimistic about the medium-to-long term outlook for home improvement and our ability to continue to grow market share.”

Lowe’s is the latest retailer to warn of slower sales ahead, as consumers become thriftier and reluctant to spend on big-ticket and discretionary items. Many other retailers, including Walmart, Target and Home Depot, also noticed fewer purchases outside of the necessities.

For Lowe’s and Home Depot, however, the time of year adds significance. Spring is the biggest sales season for home improvement.

The companies are not only competing for shoppers’ dollars as higher prices for groceries and more take up more of household budgets. They also are dealing with a shift in demand, as the spree of Covid pandemic-fueled home projects fades and consumers juggle other spending priorities, such as commutes, summer vacations and meals at restaurants.

Lowe’s competitor, Home Depot, posted a rare revenue miss with its quarterly report last week. The company missed sales expectations for the second consecutive quarter and cut its full-year forecast, as customers skipped big-ticket items like grills and opted for smaller, less expensive home projects.

Like Lowe’s, Home Depot also chalked up lower sales to colder and wetter weather in the western U.S. and falling lumber prices.

Shares of Lowe’s closed Monday at $203.15, bringing the company’s market value to $121.15 billion. Its stock is up nearly 2% so far this year, trailing the S&P 500’s gains of 9%.