First-quarter numbers from Lowe’s Companies, Inc. (NYSE: LOW) were hit by bad weather, but the stock traded higher on Wednesday morning as the impact may not have been as bad as investors had feared. Like rival Home Depot ( HD), Lowe’s said the second quarter is off to a strong start and reaffirmed its full-year guidance.
Lowe’s reported first-quarter adjusted earnings per share of $1.19 on revenue of $17.36 billion. Both numbers fell short of consensus analyst estimates of $1.22 in EPS and $17.46 billion in revenue. Revenue was up 3 percent from a year ago.
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Lowe’s reported same-store sales growth of just 0.6 percent, well short of consensus estimates of 3 percent. Like Home Depot, Lowe’s reported disappointing first-quarter numbers thanks to seasonably cold weather in parts of the country that likely delayed many outdoor home improvement projects. Earlier this month, Home Depot reported same-store sales growth of 4.2 percent, below consensus estimates of 5.4 percent.
“Prolonged unfavorable weather across geographies led to a delayed spring selling season which impacted results in outdoor categories,” Lowe’s CEO Robert Niblock says in a statement. “Spring has now arrived and we are encouraged by strong sales in the month of May.”
On Tuesday, Lowe’s announced that Niblock will be replaced by J.C. Penney (JCP) CEO Marvin Ellison in July. Niblock has served as CEO of Lowe’s for 13 years. Ellison previously served as vice president of U.S. stores for Home Depot.
Investors and analysts are hoping Ellison can help close the long-standing performance gap between Home Depot and Lowe’s. In recent years, Home Depot has consistently reported stronger sales growth numbers.
Looking ahead, Lowe’s increased its full-year revenue growth guidance from 4 to 5 percent. The company reiterated its full-year same-store sales growth guidance of 3.5 percent and its full-year EPS guidance of between $5.40 and $5.50.
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Bank of America analyst Elizabeth Suzuki says Ellison could be just the spark Lowe’s needs.
“Encouragingly, LOW noted in its press release that May trends have been strong, similar to comments from HD last week,” Suzuki says. “Although Lowe’s continues to underperform relative to Home Depot, incoming CEO Marvin Ellison played a key role in Home Depot’s success.”
Bank of America has a “buy” rating and $105 price target for LOW stock.
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Lowe’s Companies, Inc. (LOW) Reaffirms Guidance Despite Earnings Miss originally appeared on usnews.com
