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Chief Executive Officer Marvin Ellison blamed a
combination of higher costs, moves to stock more products on
shelves and an outdated pricing strategy for the "unanticipated"
impact on profit.
Since taking the helm last July, Ellison has set his sights on
closing the gap with Home Depot Inc by making changes to Lowe's
supply chain and hiring specialized merchandising teams to
ensure that more in-demand products were available for a longer
period.
The initiatives helped Lowe's record stronger quarterly
same-store sales than Home Depot for the first time in three
years, but weighed on the company's margins, which fell nearly
3% in the first quarter.
Lowe's same-store sales rose 3.5% in the quarter, outpacing Home
Depot's 2.5% increase.
Also weighing on Lowe's was higher transportation costs that
have also plagued other retailers.
Ellison said Lowe's was looking at raising retail prices to help
offset the higher costs.
Lowe's said net income rose to $1.05 billion, or $1.31 per
share, in the three months ended May 3, from $988 million, or
$1.19 per share, a year earlier.
Excluding certain one-time items, the company earned $1.22 per
share, missing the analysts' average estimate of $1.33,
according to IBES data from Refinitiv.
Lowe's now expects 2019 earnings of $5.54 to $5.74 per share,
down from a prior forecast of $6 to $6.10 per share.
On an adjusted basis, the company said it expects earnings of
$5.45 to $5.65 per share, below analysts' expectations of $6.05.
(Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur
and Sriraj Kalluvila)
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