On Tuesday, Lowe’s Cos Inc (LOW.N) lowered its year comparable sales and profit estimates as high inflation cuts consumer discretionary spending and home renovation demand.
After missing first-quarter comparable sales projections, North Carolina-based firm shares slid 2% premarket.
Inflation has pinched U.S. household budgets, halting home renovations and hurting home improvement chain sales of equipment, building supplies, and appliances.
Lowe’s results support a recent trend of U.S. customers prioritizing fundamentals over non-essentials.
This was reflected in bleak estimates from larger rivals Home Depot Inc (HD.N) and Target Corp (TGT.N), while Walmart Inc (WMT.N) upped its expectations on a grocery boost.
Home improvement chains fail as Americans choose a vacation, leisure, and other services above home improvements, while lumber prices fall more than 60%.
Consumers postponed several initiatives due to a rainy and delayed spring season in regions of the U.S.
In the reported quarter, sales to “Pro-customers”—professional builders, contractors, and handymen—were good, but CEO Marvin Ellison warned of weaker discretionary demand. Lowe’s sells 75% to DIY customers and 25% to pros, compared to Home Depot’s 50% DIY customers.
Lowe’s now forecasts full-year comparable sales to decline 2% to 4%, down from flat to down 2%. It forecast 2023 adjusted earnings between $13.20 and $13.60 per share, down from $13.60 to $14.00.
Refinitiv data showed first-quarter comparable sales declined 4.3%, compared to analysts’ projections of 3.23%.
