Lowe’s shares crater as higher costs lead to earnings miss and slashed forecast

Earnings

Lowe‘s shares plummeted 9% before the bell Wednesday after the company posted mixed fiscal first-quarter results and cut its forecast for the fiscal year.

Here’s how the company did, compared with what Wall Street was expecting, according to Refinitiv consensus estimates:

  • Earnings per share: $1.22 adjusted, vs. $1.33 estimated
  • Revenue: $17.741 billion, vs. $17.664 billion estimated
  • Same store sales: up 3.5%, vs. up 3.2% estimated

The retailer’s stock was down 9% in premarket trade.

“Our first quarter comparable sales performance is a clear indication that the consumer is healthy and our focus on retail fundamentals is gaining traction,” Lowe’s CEO and president Mark Ellison said in a company release. “However, the unanticipated impact of the convergence of cost pressure, significant transition in our merchandising organization, and ineffective legacy pricing tools and processes led to gross margin contraction in the quarter which impacted earnings.”

Lowe’s reported adjusted earnings per share of $1.22 on revenue of $17.741 billion. Wall Street estimated earnings per share of $1.33 on revenue of $17.664 billion, according to Refinitiv consensus estimates.

For fiscal 2019, the company estimates total sales will rise 2%, while same-store sales are expected to increase 3%.

Lowe’s expects net income for fiscal 2019 will be in the range of $5.54 to $5.74 per share. On an adjusted basis, it will earn between $5.45 and $5.65 per share.

Last quarter, Lowe’s said it expected to earn between $6 and $6.10 per share on revenue growth of about 2%. It predicted, at the time, that same-store sales would rise about 3% in fiscal 2019.

For the first quarter, Lowe’s’ domestic comparable sales increased 4.2%. 

“This is the first quarter in a while that Lowe’s clearly out comped Home Depot,” Oppenheimer’s Brian Nagel told CNBC’s Squawk Box on Wednesday.

Lowe’s has been in a period of transition since CEO Mark Ellison joined the retailer less than a year ago.

The home improvement retailer announced Monday they were acquiring the retail analytics platform from Boomerang Commerce with hopes that infusing technology into its core retail business will help bolster data-driven pricing and merchandising.

Lowe’s results come just a day after the leader in the space Home Depot reported better-than-expected first-quarter earnings on Tuesday. Lowe’s rival’s strong results came despite the second wettest February weather in U.S. history and a deflation in lumber costs. Home Depot reaffirmed its fiscal 2019 guidance.

As of Tuesday’s market close, Lowe’s market value was $88.4 billion, with shares are up more than 20% since the start of the year. Home Depot, with a market cap of about $211.1 billion’s shares are up more than 11% year to date.

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *