Important points
- Lowe's missed quarterly sales expectations and revised its forecast downward as demand for DIY projects slowed.
- Home improvement retailers' earnings and same-store sales declined due to lower DIY discretionary spending, especially on big-ticket items.
- Lowe's benefited from increased business from specialty contractors.
Lowe's (LOW) stock fell more than 2% in early trading Tuesday after the home improvement retailer missed revenue estimates and cut its outlook as strong demand for home upgrades during the pandemic fades. .
Lowe's currently expects full-year earnings per share (EPS) of about $13 and revenue of $86 billion. This is a downward revision from previous estimates for EPS of $13.20 to $13.60 and revenue of $87 billion to $89 billion. Additionally, the company expects same-store sales to decline 5%, compared to previous expectations of a 2% to 4% decline.
Lowe's reported third-quarter fiscal 2023 EPS of $3.06, which was better than expected, but sales were lower than expected, at $20.47 billion, down 12.8% year-over-year. Same-store sales decreased 7.4%.
Chief Executive Officer Marvin Ellison blamed the lackluster results and outlook on a decline in discretionary spending on do-it-yourself (DIY) projects, particularly big-ticket items. He noted that the “bigger-than-expected” rebound “had a disproportionate impact on our third-quarter results” because much of Lowe's revenue comes from DIY consumers. However, he explained that Lowe's is benefiting from increased demand from specialty contractors.
Tuesday's loss left Lowe's stock little changed in 2023.
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