Lowe's Cos. Inc. cut its annual sales and profit forecasts Tuesday, joining larger rival Home Depot in highlighting waning demand for home improvement goods with sticky inflation forcing consumers to cut back on discretionary spending.

Americans are also prioritizing on travel and leisure activities instead of investing further in their houses as during the pandemic, while a slump in lumber prices and a damp start to the Spring season also squeezed sales.

Inflation-wary consumers are pausing larger projects and scouting for cheaper options even for small-scale renovations.

Some are ditching preferred brands for more affordable labels while others were picking substitutes of lower quality or moving to cheaper countertops, said Bill Darcy, CEO of trade group National Kitchen & Bath Association.

Lowe's forecast cut was smaller than Home Depot's last week, but analysts warned the company could trim its outlook again this year.

"The question is - here we are, sitting in the first quarter, and is that truly a bottom or is it a matter of whether this is the beginning of more cuts," said Truist Securities analyst Scot Ciccarelli.

Lowe's expects full-year comparable sales to fall between 2% and 4%, compared to its prior outlook of flat to down 2%. In comparison, Home Depot slashed its same-store sales forecast to a 2% to 5% fall from nearly flat sales expected previously.

The company also reported a steeper-than-expected fall in first-quarter comparable sales.

Lowe's projected 2023 adjusted earnings between $13.20 and $13.60 per share, compared with $13.60 to $14.00 estimated previously.

The company's shares were 2% higher at open.

"It's not quite as bad as some had expected... It was a smaller cut (to forecasts compared to Home Depot)," D.A. Davidson analyst Michael Baker said, adding that Lowe's margins are also holding up better thanks to tighter cost control.