Lowe’s cuts 2023 outlook
Consumer spending slowdown takes a toll on bottom line
Lowe’s Cos. cut its sales outlook for the year a week after rival Home Depot Inc., citing a slowdown in spending on home improvement.
The company now expects comparable sales to drop as much as 4% this fiscal year, it said in a statement. In March, Lowe’s predicted sales by that measure might be flat or decline as much as 2%.
Lowe’s blamed falling lumber prices, unfavorable weather and lower spending on DIY and other discretionary items for declining sales. Home Depot last week also cut its full-year outlook and noted a “broad-based pullback” among consumers.
Sales in the first quarter dropped 4.3% at Lowe’s, more than analysts had anticipated. The company remains “optimistic about the medium-to-long term outlook for home improvement,” according to CEO Marvin Ellison.
Mr. Ellison noted that while sales from do-it-yourself customers were pressured in the first quarter, comparable sales from contractors were “slightly positive,” pointing to project backlogs and the success of Lowe’s loyalty program for professionals.
Analysts at TD Cowen were “encouraged” by positive professional comparable sales, and noted that Lowe’s “continues to take share with small pros.” That said, they estimate continued softness for do-it-yourself customers over the coming quarters.
DA Davidson analysts led by Michael Baker noted that Lowe’s comparable sales outperformed Home Depot for the first time since the end of 2020 and said that the reduction in guidance “was probably not a surprise.”
Economic uncertainty has led consumers to tighten their budgets and curb spending on discretionary items like home goods and apparel. Meanwhile, colder-than-usual weather in the early part of the year delayed home- improvement projects that Lowe’s typically expects during the period.