Home improvement retailer Lowe`s stuck to its annual financial targets, brushing aside lower-than-expected quarterly same-store sales that were hurt by cold weather, driving its shares up 10 percent on Wednesday.
A prolonged winter in some U.S. states hit demand for outdoor products at Lowe`s in the February-April period, but the company was optimistic about making up for lost business.
"We are anticipating recovering the majority of the sales miss in the first quarter ... So that`s what we factored in to maintain our guidance," Chief Financial Officer Marshall Croom said on a conference call with analysts.
Many U.S. retailers have said that a late start to the spring shopping season has weighed on sales of lawn-mowers, patio furniture and other seasonal products.
Still, Lowe`s Chief Executive Officer Robert Niblock said the company was already seeing a double-digit increase in same-store sales for May.
"Thankfully, as the season has begun to spike over the past couple of weeks, we believe we`ve had the staff in place to take advantage," Chief Operating Officer Richard Maltsbarger said.
Shares of Lowe`s, the No. 2 U.S. home improvement chain, jumped 9.5 percent to $93.92.
Sales at Lowe`s stores open at least a year rose 0.6 percent in the three months ended May 4, while analysts on average had expected a 3.06 percent increase, according to Thomson Reuters I/B/E/S.
"While certainly a touch disappointing, (Lowe`s report) wasn`t a big surprise to us. We believe most of the (comparable-store sales) pressure to be more transitory in nature than structural," Gordon Haskett analyst Chuck Grom said.
Like Lowe`s, its bigger rival Home Depot Inc last week blamed cold weather for missing Wall Street estimates on same-store sales.
Lowe`s maintained its annual forecast for profit and same-store sales, while slightly raising its estimate for sales growth to reflect an accounting change.
The company`s net income rose to $988 million or $1.19 per share in the quarter, while sales rose nearly 3 percent to $17.36 billion. Analysts had expected earnings of $1.22 per share and revenue of $17.46 billion.
On Tuesday, Lowe`s said current J.C. Penney CEO Marvin Ellison would be taking over at Lowe`s, replacing Niblock, who held the position for 13 years.
Bob Phibbs, CEO of consultancy firm Retail Doctor, said the change in leadership was good news for the Mooresville, North Carolina-headquartered retailer.
"New leadership at Lowe`s needs to focus on getting customers to their stores – in all weather conditions," he added.