Lowe's May sales improve, severe winter hits first-quarter results
(Reuters) - Lowe's Cos Inc (LOW.N), the world's No.2 home improvement chain, said sales picked up in May, after a severe winter in the United States hurt its quarterly results.
The company also maintained its sales growth forecast of 5 percent for the year ending January 30.
Lowe's sales rose 2.4 percent in the first quarter ended May 2, as strong demand for indoor products such as lightbulbs and faucets more than offset the impact of weakness in outdoor categories, including lumber, building materials and paint.
Chief Executive Robert Niblock told Reuters that the company was witnessing a pickup in sale of outdoor power equipment, exterior paint and other weather-dependent categories.
"We do believe that we will recoup the majority of those (lost) sales in the second quarter," Niblock said.
Spring is an important season for home improvement retailers as building renovations pick up and households prepare their gardens.
Bigger rival Home Depot Inc (HD.N) said on Tuesday that its May sales were "robust" and it expected to realize in the current quarter most of the sales lost in the first quarter.
"Similar to Home Depot ... Lowe's guidance implies the difficult winter weather in (the first quarter) delayed spring seasonal sales rather than eliminated them," Canaccord Genuity analyst Laura Champine wrote in a note.
Some analysts said the recent slowdown in the U.S. housing market was a risk for home improvement chains, but Lowe's joined Home Depot in downplaying the concerns.
Lowe's said stronger job and income growth and loosening credit conditions were favorable for spending on home improvements.
"The backdrop for home industry growth remains positive," Niblock said on a post-earnings call.
However, Lowe's comparable store sales growth lagged that of Home Depot in the first quarter. The world's biggest home improvement chain is benefiting from improved merchandising, strong relationships with contractor clients and better store-level execution, Champine said.
Home Depot, which gets most of its business from building contractors, posted a 2.6 percent rise in comparable store sales, while Lowe's posted a 0.9 percent increase.
Analysts polled by Consensus Metrix had expected Lowe's comparable store sales to rise by 5 percent.
Lowe's raised its full-year earnings forecast to $2.63 per share from $2.60 per share due to a lower tax rate.
Analysts on average were expecting $2.61 per share, according to Thomson Reuters I/B/E/S.
Lowe's first-quarter revenue rose to $13.40 billion, but missed the average analyst estimate of $13.86 billion.
Net income increased 15.6 percent to $624 million, or 61 cents per share.
Excluding items, Lowe's earned 58 cents per share, below analysts' estimate of 60 cents per share.
Lowe's shares were down slightly at $45.30 in late morning trading on the New York Stock Exchange. The stock had fallen about 8 percent this year to Tuesday's close.
(Editing by Kirti Pandey)