Lowe’s (LOW) customers are likely pulling back their hammers and nails again this quarter.
On Tuesday morning, the home improvement retailer is expected to post a 5.46% drop in revenue to $21.13 billion. Same-store sales are estimated to drop 5.64% year over year, higher than the 4.3% decline seen in Q1 2023.
Wall Street expects that consumers are cutting back their visits and spending less when they go. Foot traffic is estimated to drop 5.48%, with ticket size declining 0.83%.
Adjusted earnings per share are expected to come in at $2.95, compared to $3.67 from a year ago.
In a note to clients, Telsey Advisory Group’s Joe Feldman maintained the firm’s Hold rating on Lowe’s. He pointed to Home Depot (HD) earnings, which showed shoppers putting home renovations on the back burner.
In its recent earnings call, Home Depot executives identified a consumer spending shift toward services, a slower housing market due to higher mortgage rates, and cold, wet weather delaying the spring selling season.
In March, existing home sales fell 4.3%.
Home Depot’s head of merchandising, Billy Bastek, also said the company saw a drop in bigger DIY projects, “where customers typically use financing to fund the projects, such as kitchen and bath remodel.”
That could spell bad news for Lowe’s. The DIY consumer makes up roughly 75% of Lowe’s shopper base, compared to just 25% for Home Depot.
JPMorgan analyst Briggs Barton wrote in a client note that given the store’s larger DIY base, “the late start to spring has a larger impact on Lowe’s.”
Shares of the company are up 3% year to date, lagging the S&P 500’s (^GSPC) 11% gain.
Feldman said, “For the stock to return to sustained outperformance relative to the S&P 500, investors likely will need clearer signs the housing market is picking up meaningfully and consumers are taking on more and larger projects.”
Here’s what Lowe’s expects, compared to its Q1 2023, according to Bloomberg consensus:
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Revenue: $21.13 billion compared to $22.35 billion
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Adjusted earnings per share: $2.95 compared to $3.67
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Same-store sales growth: -5.64% compared to -4.30%
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Foot traffic: -5.48% compared to -4.00%
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Average ticket size: -0.83% compared to -0.30%
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.