Shares of Lowe's tumbled 10 percent at the opening bell Wednesday after the home improvement retailer cut its outlook for the year after a weak first quarter.
The company cited rising costs and outdated pricing tools. Lowe's recently acquired an analytics platform it says will modernize its pricing process and improve margins.
Lowe's is trying to close the gap with rival Home Depot, which reported better than expected profits and sales numbers Monday. Shares of Lowe's Companies Inc. are up almost 30 percent in the last 12 months, compared with a 2.5 percent increase at Home Depot Inc.
The company earned of $1.05 billion in the quarter, or $1.31 per share. Adjusted earnings were $1.22 per share, far short of the per share earnings of $1.33 expected by Wall Street, according to a survey by Zacks Investment Research. The company had earnings of $988 million and diluted earnings per share of $1.19 in the first quarter last year.
Lowe's revised its 2019 earnings per share outlook downward to a range of $5.45 to $5.65, from a previous range of $6 to $6.10.
The Mooresville, North Carolina, company posted revenue of $17.74 billion in the period on higher sales, topping Street forecasts for $17.63 billion. Lowe's had revenue of $17.36 billion in the first quarter last year.
Neil Saunders, managing director of GlobalData Retail, pointed to those sales as evidence that Marvin Ellison, a former Home Depot executive, is making progress in catching up to his former employer.
"Once there has been a significant improvement across all categories we believe there is a further opportunity for Lowe's to build out its customer base by capturing new shoppers," Saunders said. "This is arguably more challenging as it will involve, at least in part, going head-to-head with Home Depot."
Lowe's shares are up 11 percent in 2019, and more than 20 percent in the last 12 months.
Lowe's comparable store sales, a key gauge of a retailer's health, rose 3.5 percent overall, and 4.2 percent in the U.S.
Lowe's operates more than 2,000 stores in the U.S. and Canada.
Note: Lowe's is a corporate sponsor for WFAE.