Dive Brief:
- While the broader home sector of retail continues to face challenges, Lowe’s topped estimates in the first quarter, in part due to its efforts with the pro segment.
- Net sales increased over 10% year over year to $23.1 billion, while comparable sales grew 0.6%, driven by a strong spring as well as a nearly 16% increase in online sales.
- Operating income improved during the quarter, reaching $2.6 billion from $2.5 billion last year. Net income was essentially flat year over year at $1.6 billion.
Dive Insight:
Despite February winter storms spurring a slow start to the season, Lowe’s executives touted strong sales in the spring — the home improvement retailer’s biggest quarter.
Lowe’s Spring Fest sales event was a key driver in the retailer’s results, according to Bill Boltz, executive vice president of merchandising, with solid performance across live goods, landscape products, hard scapes and patio furniture. Across the quarter, the retailer saw positive comps from nine of its 13 merchandising categories, including appliances, electrical, millwork and paint.
The performance beat comes against the backdrop of a challenging environment for retailers in the home space, driven by a weak housing market, low consumer confidence and ever-changing tariff policies.
“With those dynamics ranged against it, Lowe’s has done well to nudge itself into growth territory,” GlobalData Managing Director Neil Saunders said in emailed comments, noting the retailer’s continued efforts to court pro customers.
While “DIY demand remains under pressure,” according to CEO Marvin Ellison, Lowe’s saw positive pro comp sales in Q1. The increase was driven by efforts like its MyLowe’s Pro Rewards loyalty program, which Ellison said “continues to resonate” with that customer cohort.
The efforts, Saunders said, are a way to position Lowe’s as a “stronger alternative to Home Depot,” which has historically been the preferred destination for pro customers. Home Depot on Tuesday reported first quarter net sales increased nearly 5% year over year to $41.8 billion, with overall comps up 0.6% and U.S. comps up 0.4%.
To grow its market share in the space even further, Lowe’s has also made strides to lure younger shoppers into its stores through collaborations with MrBeast and Dad Social.
“The younger customer initiative is especially important as while Lowe’s is a huge player, the default in home improvement has almost always been Home Depot,” Saunders said. “By creating interesting content with MrBeast, Lowe’s is trying to generate more visibility from an early age which could, over time, help reset that dynamic for future generations of shoppers.”
Looking ahead, Lowe’s expects full-year net sales to grow between 7% and 9%, reaching up to $94 billion, with comps expected to be in the range of flat to up 2%. Operating margin is projected to be between 11.2% and 11.4% and capital expenditures are expected to be up to $2.5 billion.
