By Savyata Mishra

(Reuters) -Home improvement retailer Lowe's posted a smaller-than-expected drop in first-quarter comparable sales on Wednesday, helped by steady demand from construction professionals even as spending on do-it-yourself projects weakened.

The home improvement retailer also maintained its annual forecast, joining rival Home Depot, despite tariff-led economic uncertainty that has hurt consumer spending.

Atlanta-based Home Depot said on Tuesday it would also not raise its prices, betting on its diversified supply chain and stronger hold in the professional customer base to ride out the market turbulence.

The move was at odds with retail giant Walmart, which last week warned that shoppers could soon face higher prices due to the U.S. tariffs.

Target also lowered its annual sales and profit forecasts on Wednesday, citing weakening demand among shoppers.

Escalating fears over the economic impact of U.S. President Donald Trump's trade policy have led to a plunge in consumer sentiment in recent months, causing delay in large-scale renovation projects that typically require refinancing.

Lowe's CEO Marvin Ellison said the company was operating amid "near-term uncertainty and housing market headwinds", but strategic investments in its stores and technology helped it better navigate the environment.

Last month, the company acquired Artisan Design for $1.33 billion in a move to focus on demand from professional home builders and property managers to help counter sluggish trends in the DIY category.

Lowe's has also diversified its supply chain and added more local suppliers to help it mitigate impact from U.S. tariffs.

Company executives said China made up about 20% of its imports, and it domestically sourced about 60% of its purchases.

It expects comparable sales for 2025 to be flat to up 1% and earnings per share in the range of $12.15 to $12.40.

"Lowe's guidance is in-line with current market expectations, which has to be seen as a net positive in this environment," said Sheraz Mian, director of research at Zacks Investment Research.

The company reported a 1.7% drop in same-store sales for the quarter ended May 2, compared with analysts' average estimate of a 2% decline, according to data compiled by LSEG. It earned $2.92 per share, above estimates of $2.87.

Shares of the company were down 1% in early trading.

(Reporting by Savyata Mishra in Bengaluru; Editing by Shinjini Ganguli)