Lowe's sees sales recovery, maintains annual targets
May 23, 2018
(Reuters) - Lowe’s (LOW.N) kept its annual earnings target intact despite missing Wall Street estimates for quarterly same-store sales by a large margin, driving the home improvement retailer’s shares up 9 percent on Wednesday.
A prolonged winter in some U.S. states hit demand for outdoor products at Lowe’s — which account for over a third of overall sales — in the February-April period, but the company said it was optimistic it would make up for any losses.
“We are anticipating recovering the majority of the sales miss in the first quarter ... So that’s what we factored in to maintain our guidance,” Lowe’s Chief Financial Officer Marshall Croom said on a conference call with analysts.
Many U.S. retailers have said that a late start to the spring shopping season has weighed on sales of lawn-mowers, patio furniture and other seasonal products.
Still, Lowe’s Chief Executive Officer Robert Niblock said the company was already seeing a double-digit increase in same-store sales for May.
“Thankfully, as the season has begun to spike over the past couple of weeks, we believe we’ve had the staff in place to take advantage,” Chief Operating Officer Richard Maltsbarger said.
Sales at Lowe’s stores open at least a year rose 0.6 percent in the three months ended May 4, while analysts on average had expected a 3.06 percent increase, according to Thomson Reuters I/B/E/S.
The impact of cold weather lowered same-store sales by 300 basis points, Lowe’s said.
“While certainly a touch disappointing, (Lowe’s report) wasn’t a big surprise to us. We believe most of the (comparable-store sales) pressure to be more transitory in nature than structural,” Gordon Haskett analyst Chuck Grom said.
Like Lowe’s, its bigger peer Home Depot Inc (HD.N) last week blamed cold weather for missing Wall Street estimates on same-store sales for the first time in seven quarters.
Lowe’s maintained its annual forecast for profit and same-store sales, while slightly raising its estimate for sales growth to reflect an accounting change.
The company’s net income rose to $988 million or $1.19 per share in the first quarter, while sales rose nearly 3 percent to $17.36 billion. Analysts had expected earnings of $1.22 per share and revenue of $17.46 billion.
On Tuesday, Mooresville-North Carolina-based Lowe’s said current J.C. Penney (JCP.N) CEO Marvin Ellison would be taking over at Lowe’s, replacing Niblock, who held the position for 13 years.