Lowe’s Earnings (Down) for the first quarter of 2023

A Lowe’s home improvement warehouse worker collects carts in a parking lot on August 17, 2022 in Houston, Texas.

Brandon Bell | Getty Images News | Getty Images

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

And it cut its forecast even after it beat Wall Street’s revenue and profit forecasts for the first quarter of the fiscal year.

Shares fell in pre-market trading.

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

• 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 to $2.33 billion, or $3.51 per share, in the prior year.

Net sales fell to $22.35 billion from $23.66 billion in the year-ago period, but it beat Wall Street expectations.

Comparable sales fell 4.3% in the fiscal first quarter. That’s less than the 3.4% drop expected by Wall Street, according to StreetAccount.

The home improvement retailer said it now expects total sales for the full year to be between $87 billion and $89 billion, down from the $88 billion to $90 billion it previously forecast. She said she expects comparable sales to fall 2% to 4% this fiscal year, below the flat 2% decline she had previously said.

It said adjusted earnings per share would be in the range of $13.20 to $13.60, down from the previous range of $13.60 to $14.00.

The lumber contraction, unfavorable weather and lower spending by DIY customers hurt quarterly sales, CEO Marvin Ellison said in a company press release. He said the lower forecasts reflected weaker-than-expected consumer demand.

However, he added, Lowe’s digital sales and comparative sales among home professionals increased in the first quarter compared to the same period last year.

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

Lowe’s is the latest retailer to warn of slowing sales ahead, as consumers become more frugal and reluctant to spend on expensive and discretionary items. Many other retailers, including Walmart, Target, and Home Depot, have noticed fewer purchases outside of essentials.

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

Businesses aren’t just competing for shoppers’ dollars as rising grocery prices and more take more out of family budgets. They are also dealing with a shift in demand, as the pandemic-fueled home-build spree peters out and consumers meet other spending priorities, such as commutes, summer vacations and meals at restaurants.

Lowe’s competitor Home Depot posted a rare loss in revenue with its quarterly report last week. The company missed sales forecasts for the second straight quarter and lowered its forecast for the full year, as customers skipped pricey items like grills and opted for smaller, less expensive home projects.

Like Lowe’s, Home Depot also cut sales due to cooler, wetter weather in the western United States and lower lumber prices.

Lowe’s shares closed Monday at $203.15, bringing the company’s market capitalization to $121.15 billion. Its shares are up about 2% so far this year, trailing the S&P 500’s 9% gain.

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