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Key Takeaways
- Lowe’s posts first-quarter earnings Tuesday, a week after rival Home Depot reported results.
- Analysts expect a decline in revenue and earnings from a year ago, amid a pullback in home-improvement spending as inflation weighs on consumers.
- Lowe’s and Home Depot have focused on increasing their share of the professional contractor market, in part to compensate for the slowdown in do-it-yourself spending.
Home-improvement retailer Lowe’s (LOW) reports first-quarter earnings before the bell Tuesday, a week after rival Home Depot (HD) reported its own.
Both Lowe’s and Home Depot have said several times over the last year that a slowdown in consumer spending on do-it-yourself (DIY) projects has impacted sales, as inflation weighs on many consumers.
Analysts expect Lowe’s to report revenue of $21.12 billion, with profits of $1.68 billion or $2.93 per share, according to consensus estimates compiled by Visible Alpha. All of those figures would be below what Lowe’s posted in the first quarter of fiscal 2023, when the company reported $22.35 billion in revenue, with net income of $2.26 billion or $3.77 per share.
| Analyst Estimates for Q1 2024 | Q4 2023 | Q1 2023 | |
| Revenue | $21.12 billion | $18.6 billion | $22.35 billion |
| Diluted EPS | $2.93 | $1.77 | $3.77 |
| Net Income | $1.68 billion | $1.02 billion | $2.26 billion |
Key Metric: Big-Ticket Spending
Like Home Depot, Lowe’s could mention a pullback in “big-ticket spending” in its report, as inflation-weary consumers have become less likely to take on significant home-improvement projects.
“Macroeconomic factors like persistent inflation and a stagnant housing market continue to make DIY customers and consumers hesitant to spend on big ticket purchases for their homes,” Lowe’s CEO Marvin Ellison said in the company’s fourth-quarter call in February. “And those who did engage in home improvement activities took on smaller, nondiscretionary projects with a heightened focus on value.”
The retailer launched a new rewards program in January to entice homeowners to become repeat customers, with Tuesday’s report set to be the first earnings report since the program was announced.
Ellison said it’s “very difficult to predict” when the home-improvement market will pick up steam, as the Federal Reserve waits for inflation to fall further before cutting interest rates. Once that happens, Ellison said, it’s also unknown how long it will take for those shifts to impact consumers and their spending habits.
Business Spotlight: Pro, Digital Markets
Lowe’s also sells home-improvement goods to professional contractors—a market both it and Home Depot are looking to grow, in part to offset the DIY spending slowdown. Lowe’s is also trying to grow its digital presence, like many other retailers.
For the fourth quarter, comparable Pro sales were flat with the prior-year period, with harsh winter weather impacting sales in some areas of the country, Lowe’s said.
In the February earnings call, Ellison said the company’s technology team is working to develop more new products and features like the retailer’s “immersive kitchen design app” for the Apple Vision Pro, along with its website’s ChatGPT plugin that aims to guide consumers in their home-improvement search.
Lowe’s shares have gained about 3.8% so far this year, at $230.71 as of 11:30 a.m. ET Monday.
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