updated 5/17/2004 11:07:54 AM ET 2004-05-17T15:07:54

Lowe’s Companies Inc. improved first-quarter earnings by 8 percent as the world’s second largest home improvement retailer said Monday it drove down costs and improved profit margins.

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The Mooresville-based company reported profits of $455 million, or 57 cents a share, up from $421 million, or 53 cents a share, during the same period last year.

Analysts surveyed by Thomson First Call had expected earnings of 54 cents a share for the quarter ended April. 30.

“Strength in every product category and across every geographic region drove solid earnings growth in the first quarter,” Lowe’s president Robert Niblock said.

Shares in Lowe’s fell 99 cents to $49.59 in morning trading on the New York Stock Exchange.

The retailer saw continued strong sales in big-ticket items such as outdoor power equipment and kitchen cabinets, indicating that consumers were willing to continue spending on home improvements, Niblock said.

The store chain managed to cut about 2 percent off its costs, improving its gross profit margin to 33 percent from 31 percent.

Quarterly sales increased 22 percent to $8.68 billion, from $7.12 billion in the first quarter of 2003, the company said. Comparable store sales rose 10 percent during the quarter.

Lowe’s said it would have earned $581 million, or 73 cents a share, but for the impact of an accounting change on how to treat money received from vendors for co-op advertising and in-store services.

Lowe’s opened 29 new stores and closed one during the quarter, closing the period with 980 stores in 45 states, a 15.1 percent increase over last year.

The company forecast second-quarter earnings of 89 cents to 91 cents a share and profits for the year of $2.69 to $2.72 a share. Analysts’ consensus estimates are for 89 cents and $2.66, respectively, according to Thomson First Call.

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