Lowe's reports smaller-than-expected drop in sales on steady demand

Lowe's reported a smaller-than-expected 1.7% drop in first-quarter comparable sales, exceeding analysts' estimates of a 2% decline, as consumers focused on smaller maintenance projects amid high borrowing costs. The company, like Home Depot, reaffirmed its annual forecast, projecting 2025 comparable sales to be flat to up 1% and EPS between $12.15 and $12.40. Shares of Lowe's rose approximately 2% in premarket trading following the announcement.

Analysis

Lowe's (LOW) reported a first-quarter comparable sales decline of 1.7%, a figure that surpassed analyst expectations of a 2% drop, indicating a degree of resilience despite a challenging macroeconomic backdrop characterized by higher borrowing costs. This outperformance was attributed to sustained consumer spending on essential maintenance and repair projects, even as discretionary big-ticket purchases remained subdued. In response to these market conditions, Lowe's is actively expanding its professional customer segment and has initiated supply chain adjustments, such as sourcing from suppliers closer to coastal areas to mitigate shipping delays. Importantly, the company reiterated its full-year 2025 guidance, projecting comparable sales to be flat to up 1% and earnings per share in the range of $12.15 to $12.40; this guidance aligns with that of its competitor, Home Depot (HD), which also maintained its annual forecast and indicated it would absorb potential tariff impacts due to its diversified supply chain and strong position with professional customers. Lowe's shares responded positively to the earnings release, rising approximately 2% in premarket trading, although the stock remains down 6% year-to-date, reflecting the market's cautious optimism underscored by the positive sentiment signal (0.3) for the announcement.

Key Decisions for Investors

• Investors should assess Lowe's better-than-expected Q1 sales and reiterated guidance as indicators of operational resilience against the backdrop of its 6% year-to-date stock decline, potentially signaling a re-evaluation opportunity.
• Monitoring the progress of Lowe's strategic initiatives, particularly the expansion of its professional customer base and supply chain optimization, is crucial for gauging future growth and margin stability.
• Consider the sustained impact of high borrowing costs on discretionary big-ticket purchases versus essential maintenance spending, and evaluate Lowe's ability to navigate this environment relative to competitors like Home Depot, especially concerning tariff and supply chain management.