08:38 AM EDT, 05/21/2024 (MT Newswires) -- Lowe's (LOW) on Tuesday recorded better-than-expected fiscal first-quarter results, even as consumers cut back on big-budget spending on home improvement projects.

The retailer's earnings came in at $3.06 per share for the quarter ended May 3, down from $3.77 the year before, but topped the Capital IQ-polled consensus of $2.96. Sales slipped to $21.36 billion from $22.35 billion, but were ahead of the Street's view for $21.1 billion. Shares rose nearly 3% in premarket activity.

Comparable sales decreased 4.1%, compared with the 5.7% drop modeled by analysts, as positive pro and online same-store sales partially offset the decline in do-it-yourself big ticket discretionary spending, according to Lowe's. "We are pleased with our start to spring, driven by strong execution and enhanced customer service," Chief Executive Marvin Ellison said in a statement.

"We think the company got off to a tough start, but our data indicated that sales trends accelerated towards the end of the quarter as spring weather started to emerge in different places across the country," Truist Securities said in an emailed client note. The brokerage has a buy rating on the retailer's stock with a price target of $271.

Gross margin as a percentage of sales was 33.2%, compared with 33.7% in the prior-year quarter, potentially impacted by mix and some of the company's price initiatives, according to Truist Securities. Selling, general and administrative expenses widened to $4.01 billion from $3.82 billion year-over-year.

For fiscal 2024, Lowe's continues to project EPS of about $12 to $12.30 and sales to come in between $84 billion and $85 billion. The Street is looking for GAAP EPS of $12.15 and revenue of $84.41 billion for the fiscal year. It also reiterated its outlook for comparable sales to decline by 2% to 3%, while the market's estimate is for a 2.5% decrease.

Last week, rival Home Depot (HD) also maintained its full-year guidance despite recording lower fiscal first-quarter results annually. Sales and comparable sales missed Wall Street's expectations, amid continued softness in certain larger discretionary projects.

"While we remain bullish on both (Home Depot) and (Lowe's) and the broader home improvement segment, Lowe's comparisons ease materially in (the second half) which should help its comp optics and potentially juice its (second half) stock performance," Truist analysts led by Scot Ciccarelli wrote in the note.

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