Despite strong comp growth through its eCommerce website, Lowe’s posted lower-than-expected earnings following unseasonable weather in the first quarter. The home improvement retailer’s earnings per share stood at $1.19 with top-line revenues of $17.4 billion, compared to analysts’ estimates of $1.25 and $17.63 billion, respectively.
“Prolonged unfavorable weather across geographies led to a delayed spring selling season, which impacted results in outdoor categories,” Lowe’s Chairman, President and CEO Robert A. Niblock said in a post-earnings press release. “Spring has now arrived, and we are encouraged by strong sales in the month of May.”
The quarter also marked the last earnings call for Niblock, who announced his retirement in March. To take the helm, the retailer has named JCPenney CEO Marvin R. Ellison as his replacement. The move was praised by Niblock, who said Ellison was a good fit for Lowe’s in a post-earnings conference call on Wednesday (May 23): “Marvin is an experienced retail CEO and a 30-year industry veteran with expertise in complex omnichannel environments.”
The move was also supported by William Ackman, according to people familiar with the matter: Ackman’s firm, Pershing Square Capital Management LP, has reportedly taken a billion-dollar stake in the company, The Wall Street Journal reported on Wednesday. Shares of Lowe’s rose nearly 10 percent to $94.69 on the news.
Prior to joining Lowe’s, Ellison sought to make rival Home Depot’s brick-and-mortar stores easier for customers to navigate as an executive for the retailer. He also sought to free up workers’ time to help customers by making their tasks simpler. The new strategies boosted sales at the chain, and the company’s stock tripled over a four-year period.
In terms of Lowe’s, the retailer has seen success through its digital channels.
“We drove comp growth of 20 percent on Lowe’s.com in the quarter, which now represents approximately 5 percent of sales,” Lowe’s Chief Customer Officer Michael McDermott said in the call. Going forward, the retailer will continue to enhance its online assortment and optimize search to meet changing customer expectations.
In addition, Lowe’s is focusing on making its services more accessible online. For example, the retailer now allows its customers to request flooring consultations online. The feature “has the dual benefit of making the process easier for the customer, while removing another administrative task from our selling associates,” McDermott explained.
Beyond services, the retailer is seeking to improve the customer experience of picking up orders. The company has convenient pick-up parking and a dedicated space within the store with clear signage. It has also optimized its processes to ensure a product is ready within two hours of a customer placing an order. Lowe’s “expect[s] the new processes will drive greater efficiency in order fulfillment and improve our ability to meet the expectations of customers,” McDermott said.
Looking to the second quarter, Lowe’s is encouraged by strong sales and the increased demand the spring season is creating, along with events around upcoming holidays.
“We believe we’re well-prepared with seasonal staffing in inventory to serve incremental traffic,” McDermott stated. “We look forward to our Memorial Day, Father’s Day and July 4 events with exciting messages, compelling values, strategic [branding] and differentiated experiences all designed to capitalize on the excitement of the season.”