Home improvement retailer Lowe’s (LOW) posted first-quarter earnings that failed to meet Wall Street estimates, sending the stock tumbling in premarket trading.
The company posted $16.86 billion in revenue, missing estimates of $16.96 billion. Earnings per share came in at $1.03 versus $1.06 projected by analysts. Same-store sales grew by 1.9%, missing expectations of 2.9% growth.
Total first-quarter sales increased by 10.7% to $16.9 billion, up from $15.2 billion in the same period last year. Still, sales failed to meet estimates.
Net income fell by $602 million, or 70 cents per share, in the first quarter. The company’s net income was at $884 million (98 cents per share) in the same period last year.
After rival Home Depot (HD) posted better-than-expected sales, hopes were high for Lowe’s, especially given the momentum of the housing market.
An improved labor market and rising home sales has helped the home improvement sector outperform traditional retail. While Lowe’s experienced healthy growth, its first-quarter results were still disappointing compared to rival Home Depot.
Lowe’s Down 7% Before Rallying
Lowe’s stock fell as much as 7% on the news before settling at around 4% lower.
The first quarter included a pretax loss of $464 million on debt reduction. Excluding the loss, the company earned $1.03 per share, which failed to meet estimates.
Lowe’s reaffirmed its projection of a 5% increase in revenue and a 3.5% increase in sales by the end of the year. The company now projects earnings per share of $4.30 for the year and plans to add 35 stores.
“A solid macroeconomic backdrop, combined with our project expertise, drove above average performance in indoor projects,” said Robert Niblock, CEO, in a statement. “We also continued to advance our sales to Pro customers, delivering another quarter of comparable sales growth well above the company average.”
As part of its effort to grow its base of professional customers, Lowe’s announced its $512 million acquisition of Maintenance Supply Headquarters. The acquisition may help the home improvement retailer better compete with Home Depot.