Lowe’s Cos. Inc. reported a bigger-than-expected drop in same-store sales on Wednesday, as people cocooned at home during the cold and wet April spent less on seasonal goods including grill and patio furniture.
The unseasonably cold weather hindered the U.S. home-improvement chains’ efforts to buoy sales following the robust growth seen during the pandemic-hit 2020.
Lowe’s, which is more dependent on products typically bought during spring, said overall same-store sales decreased 4 per cent in the first quarter, compared with expectations for a 2.5-per-cent decline. Lower spring products sales shaved US$350-million off its revenue.
The late arrival of spring caused larger rival Home Depot to post a double-digit sales decline in seasonal categories, while top U.S. retailer Walmart also flagged a hit.
Home Depot and Lowe’s executives, however, expect pent-up demand to boost sales of mowers, patio furniture and grills in the current quarter.
“We’re mindful that Lowe’s second quarter could potentially see a bigger spring/outdoor lift versus Home Depot,” Wells Fargo analyst Zachary Fadem said.
Shares of Lowe’s, which reaffirmed its annual forecasts, fell 2 per cent in early trading.
Sales also suffered as do-it-yourself (DIY) customers, who form 75 per cent of the company’s base, return to offices.
“[Sales to professionals] outpaced DIY in the quarter,” chief financial officer Brandon Sink said during an earnings call. “We continue to expect pro to outpace DIY for the year.”
In contrast, for Home Depot, which raised its forecasts, DIY customers constitute only 50 per cent of its base.
The results from the top two U.S. home-improvement chains come amid surging inflation and rising interest rates, which could cool a booming housing market.
Several analysts have, however, said demand for home-improvement goods would remain resilient as customers keen on staying in their lower fixed-mortgage homes upgrade them.
Lowe’s net earnings edged higher to US$2.33-billion, or US$3.51 a share, for the quarter. Analysts had expected US$3.22 a share.
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