Lowe’s Companies, Inc. (NYSE: LOW) reported its first quarter earnings for the fiscal year 2025 on May 21, showing a slight decline in sales. The company generated total sales of $20.9 billion, down from $21.4 billion in the same quarter last year. Comparable sales decreased by 1.7%, attributed primarily to unfavorable weather conditions experienced earlier in the quarter. However, Lowe’s noted that Pro and online comparable sales were up mid-single-digits, partially offsetting the overall decline.

Diluted earnings per share (EPS) for the quarter came in at $2.92, down from $3.06 year-over-year. Operating margin decreased to 11.9%, down 50 basis points compared to the prior year. The gross margin improved slightly, reaching 33.4%, up 19 basis points from the same quarter last year. Selling, general, and administrative expenses (SG&A) accounted for 19.3% of sales, reflecting an increase of 56 basis points driven by lower sales volumes and wrap-up of incremental wage actions.

The company ended the quarter with inventory valued at $18.3 billion, consistent with the previous year, and maintained robust in-stock levels across key seasonal items. Free cash flow generated in Q1 totaled $2.9 billion, while capital expenditures were $518 million. Lowe’s paid dividends amounting to $645 million at a rate of $1.15 per share during the quarter.

Looking ahead, Lowe’s reaffirmed its financial outlook for the full fiscal year, expecting total sales of between $83.5 billion and $84.5 billion. Comparable sales are anticipated to range from flat to up 1%. The operating margin is forecasted to be between 12.3% and 12.4%, with diluted EPS projected to be approximately $12.15 to $12.40 for the year.

Furthermore, the company plans to continue investing in its Total Home Strategy, which includes capital expenditures of around $2.5 billion and focuses on strengthening Pro sales and online growth. The expected completion of the Artisan Design Group acquisition for $1.325 billion later this quarter is also projected to contribute positively to future EPS.

In Q1, comparable transactions saw a decline of 3.8%, however, average ticket size increased by 2.1%. A noticeable comp sales performance trend was observed, with February showing a decline of 5.4%, while March and April improved to 1.7% growth and a slight decline of 2.6% respectively. Adjusted for the Easter shift, comp sales were roughly flat, projected to positively impact Q2 results.

Lowe’s is optimistic about executing its initiatives in the coming months and maintaining a focus on providing strong customer service, as evidenced by the company being recognized as the top provider of customer satisfaction among home improvement retailers in the recent J.D. Power survey.