Lowe’s Companies (LOW) Q1 2024: EPS Decline Amid 4.1% Sales Drop
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Lowe’s Companies (LOW) Q1 2024: EPS Decline Amid 4.1% Sales Drop

Lowe's Companies, Inc. (NYSE: LOW) reported a decrease in diluted earnings per share (EPS) for the first quarter of 2024 compared to the prior year.
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Lowe’s Companies, Inc. (NYSE: LOW) has released its financial results for the first quarter of 2024, showcasing a mixed performance. The company reported net earnings of $1.8 billion, translating to a diluted earnings per share (EPS) of $3.06.

This is a decrease from the previous year’s first-quarter diluted EPS of $3.77, including gains from the 2022 sale of its Canadian retail business. When adjusted for these gains, the diluted EPS for Q1 2023 was $3.67. Total sales for the quarter came in at $21.4 billion, down from $22.3 billion in the prior year.

The decline in comparable sales by 4.1% was partially attributed to decreased DIY big-ticket discretionary spending, although this was somewhat balanced by positive sales in the Pro and online segments.

Despite declining comparable sales, Marvin R. Ellison, Lowe’s chairman, president, and CEO, expressed satisfaction with the company’s start to the spring season. He highlighted strong execution and enhanced customer service as key drivers.

The quarter saw the national rollout of a new DIY loyalty program, expanded same-day delivery options, and market share gains in key categories. Ellison also noted the company’s growing momentum with its Total Home strategy, which is reflected in the growth of Pro and online sales. As of May 3, 2024, Lowe’s operated 1,746 stores, covering 194.9 million square feet of retail space.

Lowe’s Beats Expectations in Q1 But Sales Down by 4.1%

The company exceeded EPS forecasts when comparing Lowe’s current performance against market expectations. Analysts had anticipated an EPS of $2.95, but the actual figure was higher at $3.06. This beat suggests that Lowe’s managed to control costs effectively or gain efficiencies in its operations. The revenue also exceeded expectations ($2.14 billion) slightly, coming in at $21.4 billion.

The decrease in comparable sales by 4.1% is a significant factor. The decline in DIY big-ticket discretionary spending was a notable drag on sales, although this was partially offset by gains in the Pro and online segments.

The company’s gross margin also saw a slight decline, from 33.68% in Q1 2023 to 33.19% in Q1 2024. Additionally, operating income as a percentage of sales decreased from 14.71% to 12.42%. These figures suggest that while Lowe’s managed to maintain profitability, it faced challenges in driving sales growth and maintaining margins.

Lowe’s Affirms FY2024 Outlook, Expects Total Sales Between $84 Billion and $85 Billion

Lowe’s has affirmed its full-year 2024 outlook, providing a range of guidance metrics. The company expects total sales to be between $84 billion and $85 billion, with comparable sales projected to decline by 2% to 3% compared to the previous year.

Operating income as a percentage of sales is anticipated to be between 12.6% and 12.7%, and interest expenses are expected to be around $1.4 billion. The effective income tax rate is projected to be approximately 25%, and diluted EPS is forecasted to be in the range of $12.00 to $12.30.

Capital expenditures for the year are expected to be about $2 billion. This guidance reflects Lowe’s commitment to maintaining a disciplined capital allocation program aimed at generating long-term, sustainable shareholder value.

During the first quarter, the company repurchased approximately 3.0 million shares for $743 million and paid $633 million in dividends. These actions underscore Lowe’s focus on returning value to shareholders while continuing to invest in growth initiatives and operational efficiencies.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.