Lowe's 1Q results rise, but miss expectations
Mooresville, N.C. • Home-improvement retailer Lowe's fiscal first-quarter net income climbed 16 percent, bolstered in part by a lower tax rate.
But its revenue and its profit adjusted to exclude the effect of one-time items missed analysts' estimates as poor weather kept customers from stores during the beginning of the key spring selling season.
Nonetheless, the company raised its full-year earnings forecast on Wednesday.
Spring is the most important season for home improvement retailers as Americans start spending more on outdoor projects. But a wet and cold spring has put a damper on shoppers starting on yard and garden products. On Tuesday Lowe's larger rival Home Depot Inc. also said bad weather hurt its first-quarter results.
"We executed well during the quarter, despite an unexpectedly prolonged winter in many areas of the country," Lowe's CEO Robert Niblock said.
Niblock said in a statement that unfavorable weather conditions lowered traffic and hurt the sales of products in its exterior categories like patio and gardening goods. But he added that results for indoor categories such as plumbing parts and indoor paints were solid.
Niblock also said that results have gotten better in May.
Lowe's shares fell 27 cents to $45.25 in midday trading. The stock is down about 8 percent since the beginning of the year.
For the three months ended May 2, Lowe's Cos. earned $624 million, or 61 cents per share. A year ago the Mooresville, North Carolina, company earned $540 million, or 49 cents per share.
The lower tax rate added 4 cents per share to the latest quarter's earnings, while asset impairment charges reduced earnings by 1 cent.
Excluding these items, earnings were 58 cents per share.
Analysts polled by FactSet forecast earnings of 60 cents per share.
Revenue rose 2 percent to $13.4 billion from $13.09 billion, but still fell short of Wall Street's prediction of $13.89 billion.
Going forward, Lowe's now sees fiscal 2014 earnings of about $2.63 per share. Its prior guidance was for earnings of about $2.60 per share. Revenue is still expected to rise by approximately 5 percent. Based on fiscal 2013's revenue of $53.42 billion, that implies about $56.1 billion.
Analysts expect full-year earnings of $2.62 per share on revenue of $56.03 billion.