By Deborah Mary Sophia
(Reuters) -Lowe’s Cos Inc cut its annual sales and profit forecasts on Tuesday, joining larger rival Home Depot in highlighting waning demand for home improvement goods with sticky inflation forcing consumers to cut back on discretionary spending.
Americans are also prioritizing on travel and leisure activities instead of investing further in their houses as during the pandemic, while a slump in lumber prices and a damp start to the Spring season also squeezed sales.
Lowe’s expects full-year comparable sales to fall between 2% and 4%, compared to its prior outlook of flat to down 2%.
In comparison, Home Depot last week slashed its same-store sales forecast to a 2% to 5% fall from nearly flat sales expected previously.
“It’s not quite as bad as some had expected… It was a smaller cut (to forecasts compared to Home Depot),” D.A. Davidson analyst Michael Baker said, adding that Lowe’s margins are also holding up better thanks to tighter cost control.
Lowe’s shares were down 1% in premarket trading.
The results support a recent trend of U.S. consumers focusing on spending on essentials while pulling back on non-essentials as reflected in grim forecasts from Home Depot and Target Corp.
Meanwhile, Walmart Inc raised its expectations on a lift from groceries.
North Carolina-based Lowe’s said sales to “Pro-customers” – which includes professional builders, contractors and handymen – were positive in the reported quarter, while Home Depot posted negative sales to the that customer base.
Lowe’s projected 2023 adjusted earnings between $13.20 and $13.60 per share, compared with $13.60 to $14.00 estimated previously.
Comparable sales fell 4.3% in the first quarter, while analysts on average had expected a 3.23% drop, according to Refinitiv data.
(Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila)