Lowe's sales surge as home improvement demand holds strong

FILE PHOTO: A Lowe’s retail store is shown in Carlsbad, California, U.S., May 24, 2017. REUTERS/Mike Blake

(Reuters) -Lowe’s Cos Inc reported a near 26% jump in quarterly same-store sales on Wednesday, joining larger rival Home Depot Inc in benefiting from a fresh round of stimulus checks that helped keep demand for home improvement products resilient.

Stuck-at-home Americans fueled a surge in demand for tools, paint and building materials in the last year, as homeowners with limited options for travel or leisure activities due to pandemic restrictions used more of their discretionary income on minor remodeling and repairs.

The boom was expected to slow in the first quarter as more Americans got vaccinated and curbs eased, but the checks in March helped prop up demand.

Same-store sales at Lowe’s rose 25.9% in the first quarter ended April 30, beating analysts’ estimates for a 19.2% rise, according to IBES data from Refinitiv.

However, the increase fell short of the 31% jump Home Depot reported on Tuesday, helping it pull ahead in growth terms for the first time since the virus outbreak as more high-spending builders and handymen returned to its stores.

Shares of Lowe’s, which have gained over 65% in the last year, fell 2.5% in pre-market trading, with analysts at Evercore ISI saying investors were likely expecting a bigger beat from the company following Home Depot’s blowout quarter.

Lowe’s said it was tracking ahead what it calls a “robust market scenario” for the full year, which estimates fiscal 2021 sales of $86 billion or down about 4% from last year.

Total net sales at Lowe’s rose 24.1% to $24.42 billion in the first quarter, beating estimates of $23.86 billion, according to IBES data from Refinitiv.

Lowe’s reported net earnings of $3.21 per share, above analysts estimates of $2.62.

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