Lowe’s (LOW) earnings Q1 2021 beat estimates

A customer pushes a shopping cart to the entrance of a Lowe store in Concord, California on Tuesday, February 23, 2021.

David Paul Morris | Bloomberg | Getty Images

Lowe’s said Wednesday that fiscal first quarter sales were up 24%, exceeding Wall Street expectations as consumers continued to invest in their homes and sales among home professionals increased.

The hardware store said the momentum continued into May. Based on those trends, Lowe’s said it exceeds its previous revenue forecast of $ 86 billion for this fiscal year.

Despite the strong quarter, stocks fell 1% on Wednesday as investors compared the company to its exceptionally high growth during the height of the pandemic and feared the labor shortage could slow the property market.

The company reported for the first quarter ended April 30, versus Wall Street expectations based on an analyst survey conducted by Refinitiv:

  • Earnings per share: $ 3.21 versus $ 2.62 expected
  • Revenue: $ 24.42 billion versus $ 23.86 billion expected

The annual surplus rose $ 2.33 billion or $ 3.21 per share from $ 1.34 billion or $ 1.76 per share. one year ago. The results exceeded the analysts surveyed by Refinitiv expected $ 2.62 per share.

Net sales rose from $ 19.68 billion last year to $ 24.42 billion, exceeding analysts’ expectations of $ 23.86 billion.

Lowe’s sales in the same store rose 25.9% for the quarter. According to a survey by StreetAccount, that’s higher than Wall Street’s expected growth of 20.3%.

More pro-business

For some analysts, however, this sharp trajectory was not good enough. Zack Fadem, senior equity analyst at Wells Fargo, said in a research note that some had expected growth in the upper 20% to a low 30%.

Rival Home Depot saw sales jump nearly 33% in the first quarter, but the retailer declined to provide a forecast. Shares fell Tuesday and fell more than 1% on Wednesday. Both Home Depot and Lowe shares are up around 20% since the start of the year.

Marvin Ellison, CEO of Lowe, highlighted the reasons why investors should continue to bet on the company for a profit call. He said it is gaining more business from home professionals, a more lucrative and stable type of customer. He said it will keep adding more brands to its stores and website so that it will carry everything from wood to pillows. And he said real estate trends will stay on the retailer’s side.

“Although we are all looking forward to a world after Covid, our research shows that the importance of the house will remain elevated for many years to come,” he said.

Sawn timber was the company’s strongest growth category for the quarter, said Bill Boltz, executive vice president of merchandising. The comparable turnover compared to the same period of the previous year was also over 30% for home decor, electrics, kitchen and bathroom as well as for seasonal and outdoor living.

He said stimulus checks supported larger ticket projects and the company saw early demand for popular spring purchases like patio items and grills.

Manage supply bottlenecks

Both do-it-yourselfers have benefited from the booming real estate market, but are facing new challenges. The demand for houses remains high, but a labor crisis, rising lumber prices and land shortages make it difficult for construction to keep up. The number of single-family homes fell more than 13% in April compared to March, the US census reported Tuesday. This is the sharpest drop since April 2020, when the pandemic brought the economy to a standstill.

According to Boltz, the dealers managed the wood closely and stayed in touch with the suppliers to make sure Lowe’s kept up with demand.

“Strong stocks in this tight market have enabled us to further strengthen customer relationships, especially with the Pro [home professional],” he said.

Also in the financial year Lowe’s competes against large numbers. It opened stores as a major retailer during last year’s lockdowns. Because customers stayed at home, they took on home improvement projects, replaced kitchen appliances, and built up their lawns or backyards. Some investors are skeptical that people will keep eating, going on vacation, and spending their time in other ways.

At the close of trading on Tuesday, Lowe’s shares were up about 20% this year. The stock closed at $ 192.75 on Tuesday, bringing the market value to $ 138.24 billion.

Read the full press release here.

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