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Lowe’s earnings fall due to housing slump

Lowe’s Cos., the nation’s second biggest home improvement store chain, said Friday that its fourth-quarter profit fell 11.5 percent due to a slowing home improvement market amid a continued slump in the housing sector.
/ Source: The Associated Press

Lowe’s Cos., the nation’s second biggest home improvement store chain, said Friday that its fourth-quarter profit fell 11.5 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 $613 million, or 40 cents a share, for the three months ended Feb. 2, down from $693 million, or 43 cents a share, a year earlier.

Revenue fell 3.7 percent to $10.4 billion from $10.8 billion a year earlier. Same-store sales, a key measure of industry performance that is based on sales in stores open at least one year, fell 5.3 percent.

The company, which opened 58 stores in the quarter, had expected same-store sales decline of 4 percent to 6 percent for the quarter.

Analysts surveyed by Thomson Financial were expecting net income of 37 cents a share on revenue of $10.36 billion. The estimate for earnings typically excludes one-time items.

The results encouraged Wall Street.

On Tuesday, bigger rival Home Depot Inc. said its fourth-quarter income dropped 28 percent. Its same-store sales dropped 6.6 percent.

“Sales continued to be pressured by a slowing housing market, tough comparisons to last year’s hurricane recovery and rebuilding efforts and significant deflation in lumber and plywood prices,” Robert A. Niblock, Lowe’s chairman and chief executive said in a statement accompanying the results.

For the year, Lowe earnings rose 12.3 percent to $3.11 billion, or $1.99 a share, from $2.77 billion, or $1.73 a share, a year earlier. Twelve-month revenue rose 8.6 percent to $46.9 billion from $43.2 billion in the previous year.

Lowe’s expects to earn 49 cents to 51 cents a share for the first quarter and show sales growth of 5 percent to 6 percent. The company anticipates same-store sales decline of 2 percent to 4 percent for the period.

For fiscal 2007, the company expects to earn $2.02 to $2.09 a share. It plans to open 150 to 160 stores and estimates total sales growing about 10 percent. Same-store sales are projected to be flat up to 2 percent.