LOW’s 1Q17 performance
For 1Q17, Lowe’s Companies (LOW) posted revenue of ~$16.9 billion, which represents a growth of 10.7% from its ~$15.2 billion in 1Q16. Analysts were expecting the company to post $16.96 billion, however. The company management blamed weak sales in outdoor categories for the lower-than-expected sales.
Factors that drove Lowe’s 1Q17 revenue
Lowe’s 1Q17 revenues were driven by positive SSSG (same-store sales growth) of 1.9%, and the acquisition of RONA and Central Wholesalers. During the quarter, RONA generated sales of $630 million, which represented 4.2% of its total sales growth. By the end of 1Q17, the company operated 2,137 stores, as compared to 1,860 stores in 1Q16.
Sales from Pros customers outperformed the company’s average. These strong sales came from rough plumbing, electrical, and lumber building materials as recovery efforts continued after Hurricane Matthew and Louisiana flooding. Appliances also posted above-average sales with improvements in brand assortments, competitive pricing, and delivery and haul-away services.
Lowe’s revenues were also positively impacted by macroeconomic improvements, such as the rise in the housing price index, higher housing turnover, and lower unemployment.
Remember, as housing prices increase, homeowners are encouraged to remodel and upgrade their houses, thus boosting home improvement retailers’ sales.