updated 5/21/2007 9:55:49 AM ET 2007-05-21T13:55:49

Lowe’s Cos., the No. 2 U.S. home improvement chain, said Monday that its first-quarter profit fell 12.1 percent due to a slowing home improvement market amid a continued slump in the housing sector.

The Mooresville, N.C.-based retailer said it earned $739 million, or 48 cents a share, for the three months ended May 4, down from $841 million, or 53 cents a share, a year earlier.

Revenue rose to $12.2 billion from $11.9 billion a year earlier. Same-store sales, or sales in stores open at least one year, a key measure of industry performance, fell 6.3 percent.

Analysts surveyed by Thomson Financial had been looking for net income of 49 cents a share on revenue of $12.4 billion.

“Multiple factors, including a difficult housing market in many areas, tough comparisons to hurricane rebuilding efforts, and significant lumber and plywood price deflation, continued to create a challenging sales environment in the first quarter,” Robert A. Niblock, Lowe’s chairman and chief executive said in a statement accompanying the results.

Last week, rival Home Depot Inc., the nation’s largest home improvement store chain, said its first-quarter income dropped 29.5 percent. Its same-store sales dropped 7.6 percent.

Lowe’s expects to earn 62 cents to 64 cents a share for the second quarter and show sales growth of 6 percent to 7 percent. The company anticipates same-store sales decline of 1 percent to 3 percent for the period.

For fiscal 2008, the company expects to earn $1.99 to $2.03 a share. It plans to open 150 to 160 stores and estimates total sales growing about 7 percent. Same-store sales are projected fall 1 percent to 2 percent.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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