Long winter hurts Lowe's in Q1
A day after naming a new CEO, Lowe's reported that unseasonably cold weather during April put a damper on sales growth during the first quarter, just as it did with Home Depot.
Specifically, Lowe's reported that same store sales for the U.S. home improvement business increased 0.5 percent. Lowe's also reported that $17.4 billion in sales for the first quarter, just below the $17.5 billion in sales for the quarter that analysts said they had anticipated for the retailer.
Outgoing Lowe's CEO Robert Niblock told analysts that he blamed a "prolonged unfavorable" weather across geographies, including "the coldest April since 2007" and a delayed spring selling season for the poor results. However, he noted optimistically that Spring has now arrived, adding that "comps for May have achieved a double-digit positive."
Lowe's also reported net income of $988 million in the first quarter. Lowe's expects earnings of $5.40 to $5.50 a share for the full year, ending Feb. 1, 2019.
"Lowe's has built a very strong seasonal business over the years," Niblock said. "With the coldest April since 2007, outdoor products were certainly impacted. We drove solid performance in indoor categories and continued to grow our sales to Pro customers. However, prolonged unfavorable weather across geographies led to a delayed spring selling season which impacted results in outdoor categories. Spring has now arrived and we are encouraged by strong sales in the month of May," Niblock said.
The underwhelming results for Lowe's come after the home improvement retailer announced it is bringing in former Home Depot exec Marvin Ellison, the current CEO of J.C. Penney, as CEO. He is being touted as a transformative event for the home improvement giant that many observers hope will bring some of Home Depot's success to Lowe's.
"We continue to work diligently to improve conversion, better manage inventory and stabilize gross margin, while investing in the capabilities required to deliver simple and seamless customer experiences," Niblock added. "I'd like to thank our employees for their commitment and dedication to helping people love where they live."
Delivering on its commitment to return excess cash to shareholders, the company repurchased $750 million of stock under its share repurchase program and paid $340 million in dividends in the first quarter.
As of May 4, 2018, Lowe's operated 2,154 home improvement and hardware stores in the United States, Canada and Mexico representing 215.1 million square feet of retail selling space.