Lowe’s cuts guidance due to soft do-it-yourself demand

Lowe’s Companies (NYSE:LOW) traded slightly lower in premarket action after posting a mixed Q2 earnings report and lowering its full-year guidance.

For the first quarter, the North Carolina-based specialty retailer reported comparable sales decreased by 5.1%, which was below the consensus estimate for a decline of 4.4%. The company noted that comparable sales for the quarter saw continued pressure in DIY bigger ticket discretionary spending and unfavorable weather adversely impacting sales in seasonal and other outdoor categories, partially offset by positive comparable sales in the pro and online businesses. “The company delivered strong operating performance and improved customer service despite a challenging macroeconomic backdrop, especially for the homeowner,” CEO Marvin Ellison.

Gross margin fell to 33.5% of sales from 33.7% a year ago. Cost of sales was 66.5% of total sales, in comparison to 66.3% a year ago. Operating income was 14.6% of sales, vs. 15.7% a year ago. Non-GAAP EPS was reported at $4.10 vs. $4.00 consensus.

During the quarter that ended on August 2, Lowe’s (LOW) repurchased approximately 4.4 million shares for $1.0 billion, and it paid $629 million in dividends.

Based on lower-than-expected DIY sales and a pressured macroeconomic environment, the company is updating its outlook for the operating results of full year 2024. Lowe’s (LOW) said it expects total sales of approximately $82.7 billion to $83.2 billion for the full year vs. $84.2 billion consensus, comparable sales to be down -3.5% to -4.0% compared to a year ago, and adjusted EPS of $11.70 to $11.90 vs. a prior outlook for $12.00 and $12.30 and $12.09 consensus.

Shares of Lowe’s (LOW) were down 0.88% in premarket trading. Home Depot (HD) was off 0.31%.