Lowe's (LOW) Q1 2023 Earnings Call Transcript

For the period ending May 5, 2023

May 23, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, everyone and welcome to Lowe’s Companies First Quarter 2023 Earnings Conference Call. My name is Rob and I will be your operator for today’s call. As a reminder, this conference is being recorded. I’ll now turn the call over to Kate Pearlman, Vice President of Investor Relations and Treasurer.

Kate Pearlman

Thank you and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer; Bill Boltz, our Executive Vice President, Merchandising; Joe McFarland, our Executive Vice President, Stores; and Brandon Sink, our Executive Vice President and Chief Financial Officer.

I would like to remind you that our notice regarding forward-looking statements is included in our press release this morning, which can be found on Lowe’s Investor Relations website. During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2023. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the risk factors, MD&A and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found on the quarterly earnings section of our Investor Relations website.

Now, I will turn the call over to Marvin.

Marvin Ellison

Thank you, Kate and good morning everyone. In the first quarter, our comparable sales declined 4.3%, driven by approximately 350 basis points of lumber deflation, unfavorable weather and lower DIY discretionary sales. We continue to build momentum with the Pro through our MVPs Pro Rewards program and our expanded assortment of Pro national brands.

Lumber deflation disproportionately impacted Pro sales by approximately 800 basis points of comp pressure. And despite this pressure, comparable Pro sales were slightly positive in Q1 with broad-based strength across multiple categories. This positive comp in Pro builds on top of a 22% U.S. Pro comp in the first quarter of last year. DIY sales were pressured by delayed spring and lower-than-expected discretionary demand, although we are encouraged to see better trends in periods of favorable weather. A late start to spring disproportionately impacts do-it-yourself customers who represent 75% of our business, given many seasonal categories are heavily concentrated in DIY. As weather improves, we are optimistic that customers will reengage with spring projects, and we are ready to support the increased demand with our best in-stock position and staffing levels in 3 years, coupled with improved omnichannel and fulfillment capabilities. However, we are expecting a pullback in discretionary consumer spending over the near-term. Given these trends, we are updating our full year outlook this morning.