Lowe’s Companies Inc (NYSE:LOW) stock fell 1.88% (As on May 24, 11:38:11 AM UTC-4, Source: Google Finance) after the company posted better-than-expected results in first-quarter fiscal 2023. Comparable sales fell 4.3% in the quarter under review, driven by lumber deflation, adverse weather and weak DIY discretionary sales. Gross profit slipped 6.5% year over year to $7,527 million, while the gross margin contracted 30 basis points (bps) to 33.7%. Operating income amounted to $3,288 million, down 0.4% year over year. However, the operating margin expanded 70 bps from the year-earlier quarter to 14.7%. LOW ended the quarter with cash and cash equivalents of $2,950 million, long-term debt (excluding current maturities) of $35,863 million and shareholders’ deficit of $14,710 million. Lowe’s generated cash flow from operations of $2,106 million for the first quarter of fiscal 2023. Capital expenditures amounted to $0.4 million for the aforementioned period.
LOW in the first quarter of FY 23 has reported the adjusted earnings per share of $3.67, beating the analysts’ estimates for the adjusted earnings per share of $3.48, according to the Zacks Consensus Estimate. The company had reported 5.5 percent decrease in the adjusted revenue to $22.35 billion in the first quarter of FY 23, beating the analysts’ estimates for revenue of $21.56 billion.
Moreover, the company is seeing increased demand in paint, especially from the pros who paint as they take advantage of the paint job site delivery, the MVPs Paint Rewards Program, and the improved product assortment. Within decor, the company has recently launched new closet organization solutions across four private brands to meet a range of storage needs and budgets. In hard lines, the company’s performance was pressured by the delayed spring, some volatile weather in the West, and softer discretionary spending.
For fiscal 2023, LOW expects a capex of up to $2 billion. Management revised guidance for fiscal 2023 owing to greater-than-expected lumber deflation and weaker-than-expected DIY discretionary sales. LOW now expects revenues of $87-$89 billion versus the earlier projection of $88-$90 billion. In fiscal 2022, Lowe’s revenues were $97.1 billion. Comparable sales in fiscal 2023 are envisioned in the range of -2% to -4%, compared with the previous projection of flat to a 2% fall. The adjusted operating margin is expected to be 13.4-13.6% versus 13.6-13.8% anticipated earlier. Management anticipates earnings per share of $13.20-$13.60 for the fiscal year versus the earlier guidance of $13.60-$14.00 and $10.17 per share earned in fiscal 2022.