Lowe’s Companies Inc (NYSE:LOW) stock fell 2.90% (As on May 21, 11:24:20 AM UTC-4, Source: Google Finance) after the company warned of operating margin pressure in the current quarter as the home improvement chain expects to see muted demand, overshadowing its smaller-than-expected drop in quarterly same-store sales. Same-store sales at Lowe’s fell 4.1% in the first quarter, compared to estimates of a 5.65% decline. While customers have been willing to undertake smaller repair works, they have largely been tight-fisted with their spending on expensive renovations, hurting sales at home improvement retailers like Lowe’s. Lowe’s said it saw do-it-yourself (DIY) customers under pressure in categories such as home decor, even as its pro-customers, which include professional builders, contractors and handymen, drove positive sales after it invested in improving product assortment across stores. DIY contributes about 75% to Lowe’s revenue, while the pro business accounts for 25%. As of May 3, 2024, Lowe’s operated 1,746 stores representing 194.9 million square feet of retail selling space.
Meanwhile, this quarter the company had rolled out the new DIY loyalty program nationally, expanded same-day delivery options and took market share in key categories. The company continues to gain momentum with the Total Home strategy, reflected in the growth in Pro and online.
LOW in the first quarter of FY 24 has reported the adjusted earnings per share of $3.06, beating the analysts’ estimates for the adjusted earnings per share of $2.94. The company had reported the adjusted revenue of $21.36 billion in the first quarter of FY 24, beating the analysts’ estimates for revenue of $21.12 billion. The company has reported net earnings of $1.8 billion for the quarter ended May 3, 2024, which included a gain associated with the 2022 sale of the Canadian retail business.
Additionally, the company during the quarter, had repurchased approximately 3.0 million shares for $743 million, and it paid $633 million in dividends.
Lowe’s, which reaffirmed its annual sales and profit targets, earned $3.06 per share for the quarter ended May 3. Analysts had expected a profit of $2.94, according to LSEG data. Guidance for full-year sales of US$84 to US$85 billion was firmed up. For full year 2024, comparable sales are expected to be down -2 to -3% as compared to prior year, Operating income as a percentage of sales (operating margin) to be in the of range of 12.6% to 12.7%, Interest expense to be of approximately $1.4 billion and Capital expenditures to be of approximately $2 billion