Lowe's: cuts guidance due to gross margin contraction

(CercleFinance.com) - Lowe's said that cost pressure has led to a contraction in its gross margin over the past quarter, impacting its earnings, leading it to cut its full-year guidance.


The second-largest home improvement retailer in the US behind Home Depot today reported net profit of 1 billion dollars, or 1.31 dollar per share, for the quarter ended 3 May, compared to 988 million dollars, or 1.19 dollar, in the first quarter of 2018.

Sales for the first quarter increased 2.2% to 17.7 billion dollars, with comparable sales up 3.5%, showing "that the consumer is healthy," it said.

However, Lowe's - which is still in the early stages of its transformation process - said that it has identified the impact of the gross margin contraction, and has updated its guidance accordingly.

Total sales are now expected to increase by approximately 2% this year, while comparable sales are expected to increase approximately 3%, the group said.

Lowe's said it expects to deliver improved gross margin performance over the remainder of the year, however, its shares are currently down 7% in pre-market trading.

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