Lowe's missed earnings expectations on Wednesday but reported a 4.5 percent rise in quarterly sales as demand rose for products such as appliances and outdoor power equipment.
The shift toward bigger ticket items most likely accounted for slight weakness in gross margins, said Brian Nagel senior equity research analyst at Oppenheimer. Those high-priced items typically have lower margins, so while they boost revenues, they hurt profitability, he told CNBC's "Squawk Box."
Shares of Lowe's were down 1 percent in premarket trading. (Get the latest quote here.)
The No. 2 U.S. home improvement chain posted second-quarter earnings of $1.20 per share, up from $1.04 a share in the year-earlier period.
Revenue rose to $17.35 billion from $16.6 billion a year ago.
Wall Street had expected Lowe's to deliver quarterly earnings per share of $1.24 on $17.27 billion in revenue, according to consensus estimates from Thomson Reuters.
The company's same-store sales rose 4.3 percent in the second quarter, stronger than the 3.9 percent expected by analysts polled by research firm Consensus Metrix.
Lowe's said it expects full-year earnings of $3.29 per share.