© Reuters. FILE PHOTO: Shoppers load a box of merchandise into a truck after visiting a Lowe’s hardware store in Philadelphia, Pennsylvania, U.S. November 4, 2020. REUTERS/Mark Makela
(Reuters) – Lowe’s (NYSE:) Cos Inc reported a bigger-than-expected drop in same-store sales on Wednesday, as people cocooned at home during the cold and wet April spent less on seasonal goods such as grill and patio furniture.
The unseasonal cold weather piled more pressure on U.S. home improvement chains striving to boost revenue following the double-digit quarterly sales growth seen during the early stages of the pandemic.
The late arrival of spring led to seasonal categories posting a double-digit decline in same-store sales at larger rival Home Depot Inc (NYSE:), while top U.S. retailer Walmart (NYSE:) Inc also flagged a hit to patio furniture sales.
Lowe’s overall same-store sales decreased 4% in the first quarter, compared with expectations for a 2.5% decline. Sales also suffered a knock as Lowe’s dominant do-it-yourself (DIY) customers return to offices.
“Because 75% of our customer base is DIY, our Q1 sales were disproportionately impacted by the cooler spring temperatures,” Chief Executive Marvin Ellison said.
Seasonal goods account for 35% of Lowe’s first quarter, meaning the cooler weather will impact the near 2,000-store chain more than it affected Home Depot, brokerage D.A. Davidson said on Tuesday.
Meanwhile, Home Depot executives said on Tuesday more customers would buy mowers, patio furniture and grills in the current quarter on pent-up demand.
“We’re mindful that Lowe’s second quarter could potentially see a bigger spring/outdoor lift versus Home Depot,” Wells Fargo (NYSE:) analyst Zachary Fadem said.
Lowe’s reaffirmed its outlook for fiscal 2022. Home Depot, in contrast, increased its annual forecasts after posting a surprise rise in quarterly sales on demand from professionals, including builders and handymen.
Lowe’s shares, down 25% so far this year, fell 1% in premarket trading.
Net earnings edged higher to $2.33 billion, or $3.51 per share. Analysts had expected $3.22 per share.
Net sales fell 3% to $23.66 billion, missing estimates of $23.76 billion, according to IBES data from Refinitiv.
