Lowe’s Companies Inc. (NYSE: LOW) topped market expectations on revenue for the first quarter of 2019 but earnings fell shy of forecasts, causing shares to sink 9% in premarket hours on Wednesday.
Total sales were $17.7 billion, up 2.2% from the same period last year. Comparable sales grew 3.5% while comparable sales for the US home improvement business rose 4.2%.
On a GAAP basis, the company reported net income of $1 billion, or $1.31 per share, compared to $988 million, or $1.19 per share, in the year-ago period. Adjusted EPS was $1.22.
Lowe’s had planned to exit its Mexico retail operations by selling the operating business. However, after an extensive market evaluation, the company decided to sell the assets of the business instead. This decision resulted in an $82 million tax benefit in the first quarter, which offset $12 million of pre-tax operating costs for the Mexico retail operations.
Marvin R. Ellison, Lowe’s president and CEO said, “We are taking the necessary actions to more systematically analyze and implement retail price changes to mitigate cost pressure. Our recent acquisition of the Retail Analytics platform from Boomerang Commerce will also assist in modernizing and digitizing our approach to pricing. We are still in the early stages of our transformation, and with the changes we are putting in place, we expect to deliver improved gross margin performance over the balance of the year.”
As of May 3, 2019, Lowe’s operated 2,002 home improvement and hardware stores in the US and Canada, representing 208.8 million square feet of retail selling space.
For fiscal year 2019, total sales are expected to increase approx. 2% while comparable sales are expected to increase approx. 3%. GAAP EPS is expected to be $5.54 to $5.74 and adjusted EPS is expected to be $5.45 to $5.65.
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