Lowe’s (LOW) delivered on subdued expectations after years of post-pandemic struggles.
The home improvement chain reported earnings on Wednesday morning that matched estimates on revenue and beat on earnings. Revenue fell 2% year over year to $20.93 billion, while adjusted earnings per share dropped 4.6% to $2.92, compared to the $2.88 expected.
The results “reflect ongoing pressure in DIY bigger ticket discretionary demand” and a “slower start to spring” due to poor February weather, Lowe’s CEO Marvin Ellison said on the earnings call. He added the company contends with “significant macro uncertainty” and “ongoing challenges in the housing market.”
Same-store sales fell 1.7%, better than the 2.04% decline expected. That’s a reversal after same-store sales growth turned positive in Q4 for the first time in roughly two years. The average ticket jumped 2.1%, while transactions fell 3.8%.
Growth in pro and online sales mitigated some of the weather effects. Online sales were up 6%, and the company has been investing in its pro business with the acquisition of Artisan Design Group.
Lowe’s stock fell 1% in morning trading. Prior to Wednesday’s report, Lowe’s stock was down roughly 6% year to date versus a 1% gain for the S&P 500 (^GSPC).
Rival Home Depot’s (HD) stock was down 3.1% year to date. It reported mixed earnings results on Tuesday as it reiterated guidance and said it will not raise prices due to tariffs.
Read more about retailer stock moves and today’s market action.
Here’s what Lowe’s reported for its first quarter earnings compared to Wall Street consensus estimates, according to Bloomberg:
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Revenue: $20.93 billion, versus $20.93 billion
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Adjusted earnings per share: $2.92, versus $2.88
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Same-store sales growth: -1.7%, versus -2.04%
The company reiterated its guidance for the 2025 fiscal year. Total sales are projected to be $83.5 billion to $84.5 billion, while same-store sales are expected to be flat to up 1% year over year.
Tariff uncertainty remains a top concern. The US temporarily dropped tariffs on Chinese imports from 145% to 30%, while so-called reciprocal tariffs have been suspended for a 10% universal duty. However, rates are still much higher than they were historically, and the changing tariff environment has tanked consumer sentiment.
Read more: What Trump’s tariffs mean for the economy and your wallet
Lowe’s sources 20% of its sales from China, including items like ceiling fans, small appliances, and tools. It will have a tougher time mitigating tariffs compared to Home Depot, TD Cowen analyst Max Rakhlenko wrote in a note prior to earnings. He added that Home Depot is “better positioned to manage tariffs,” partially due to its larger pro business.
In the call, Lowe’s said it sources roughly 60% of its sales from the US. Executives told investors the company is seeking to limit exposure to China.
“We’re looking at in partnership with both private brand and national brand suppliers to find different countries” to produce products, said Bill Boltz, executive vice president of merchandising. The team is “looking at SKU by SKU, product category by product category, looking at line structures, looking at assortments, looking at what makes sense going forward.”
The chain will eliminate items that could be impacted by tariffs, which Home Depot also said on its earnings call.
Another factor weighing on the retailer is the sluggish housing market. Homebuilder confidence continued to deteriorate in May. Expected sales in the next six months and traffic from prospective buyers also fell to an 18-month low.
On Monday, the 10-year and 30-year Treasury yields (^TNX, ^TYX) rose after Moody’s downgraded the US government’s long-term credit rating from AAA to AA1. Higher Treasury yields will likely spell higher financing costs for home improvement projects and homebuying, creating another headwind for the sector.
Read more: Are home improvements tax deductible?
Lowe’s executives previously said they anticipate homeowners will renovate their homes rather than move due to stubbornly high mortgage rates. CFO Brandon Sink noted that the chain has yet to see shoppers “reengage in larger discretionary categories,” but the “trends aren’t getting any worse.”
Fink said the company isn’t expecting a substantial change in 2025. “It’s sort of expected that it’s going to be more of the same at this point.”
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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