Home improvement retailer Lowe’s (NYSE:LOW) reported Q1 CY2024 results topping analysts' expectations, with revenue down 4.4% year on year to $21.36 billion. The company expects the full year's revenue to be around $84.5 billion, in line with analysts' estimates. It made a GAAP profit of $3.06 per share, down from its profit of $3.77 per share in the same quarter last year.

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"We are pleased with our start to spring, driven by strong execution and enhanced customer service," said Marvin R. Ellison, Lowe's chairman, president and CEO.

Founded in North Carolina as Lowe's North Wilkesboro Hardware, the company is a home improvement retailer that sells everything from paint to tools to building materials.

Home Improvement Retailer

Home improvement retailers serve the maintenance and repair needs of do-it-yourself homeowners as well as professional contractors. Home is where the heart is, so any homeowner will want to keep that home in good shape by maintaining the yard, fixing leaks, or improving lighting fixtures, for example. Home improvement stores win with depth and breadth of product, in-store consultations for customers who need help, and services that cater to professionals. It is hard for non-focused retailers and e-commerce competitors to match these. However, the research, convenience, and prices of online platforms means they can’t be fully written off, either.

Sales Growth

Lowe's is a behemoth in the consumer retail sector and benefits from economies of scale, an important advantage giving the business an edge in distribution and more negotiating power with suppliers.

As you can see below, the company's annualized revenue growth rate of 3.6% over the last five years was weak as its store count dropped.

This quarter, Lowe's revenue fell 4.4% year on year to $21.36 billion but beat Wall Street's estimates by 1.3%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.

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Same-Store Sales

Same-store sales growth is an important metric that tracks demand for a retailer's established brick-and-mortar stores and e-commerce platform.

Lowe's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 2.9% year on year. The company has been reducing its store count as fewer locations sometimes lead to higher same-store sales, but that hasn't been the case here.

In the latest quarter, Lowe's same-store sales fell 4.1% year on year. This performance was more or less in line with the same quarter last year.

Key Takeaways from Lowe's Q1 Results

It was good to see Lowe's beat analysts' revenue and EPS estimates this quarter, driven by its better-than-expected same-store sales performance (4.1% decline vs estimates of a 5.8% decline). On the other hand, its gross margin and full-year revenue guidance missed analysts' projections. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 2.1% after reporting and currently trades at $234.15 per share.

So should you invest in Lowe's right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.