Lowe’s Cos. (LOW.) raised doubts about its turnaround as the home-improvement retailer reported lower-than-expected quarterly earnings and cut its full-year earnings estimates, citing cost pressures.

-Adjusted earnings per share this year will be between US$5.54 and US$5.74, down from a prior estimate of between US$6 and US$6.10. The range will be lower the following year. First-quarter profit, excluding some items, was US$1.22, trailing analysts’ average estimate of US$1.33.

Key Insights

-Lowe’s is taking action to mitigate cost pressures and said it’s still in the early stages of its transformation. Unlike larger rival Home Depot Inc., it didn’t blame excessive rain and cold weather for weighing on sales last quarter.

-“The consumer is healthy,” it said, amid signs that the rise in U.S. housing prices is slowing. Prices have been rising since late last decade, which has been a boon to the home-improvement industry.

-Spring is the biggest selling season for Lowe’s and it spreads over the first and second quarters. The company raised expectations in late February when it said the season had started off well.

Market Reaction

Lowe’s fell almost 10 per cent in pre-market trading Wednesday. The stock had gained 20 per cent this year through Tuesday’s close.