Consumers kept coming to Lowe’s in the first quarter as the home improvement retailer reported an increase in comparable store sales for the three months ended May 3.
But the retailer, citing various factors including cost pressures, reported lower-than-expected net earnings leading Lowe’s to cut the company’s full-year earnings estimate.
Net sales were $17.7 billion, up from net sales of $17.4 billion in the comparable quarter the previous year. Net earnings were $1.05 billion, or $1.31 per diluted share, compared with net earnings of $988 million, or $1.19 per diluted share, in the first quarter of 2018.
U.S. comparable store sales were up 4.2%.
“Our first quarter comparable sales performance is a clear indication that the consumer is healthy and our focus on retail fundamentals is gaining traction,” said Marvin Ellison, Lowe’s president and CEO. “However, the unanticipated impact of the convergence of cost pressure, a significant transition in our merchandising organization, and ineffective legacy pricing tools and processes led to gross margin contraction in the quarter which impacted earnings.”
He said the company is taking steps to systematically analyze and implement retail price changes to mitigate cost pressure. Lowe’s recent acquisition of the Retail Analytics platform from Boomerang Commerce will assist the company in modernizing and digitizing its approach to pricing, Ellison said.
Looking ahead for the remainder of the fiscal year, Lowe’s expects total sales to grow approximately 2% with comparable store sales expected to increase 3%. Diluted earnings per share is expected to be between $5.54 to $5.74.