Lowe's Cos., the No. 2 U.S. home improvement chain, said Monday that its third-quarter profit fell 10.2 percent, citing a weak sales environment amid a continuing slump in the housing sector.
The company also slashed its outlook for the fourth quarter and the full year, sending its shares down 4 percent in premarket trading.
It's been a tough quarter for home-improvement retailers. Home Depot Inc., Lowe's bigger rival, reported a 27 percent drop in third-quarter earnings last week and cut its full-year outlook, citing the persistent housing slump.
Mooresville, N.C.-based Lowe's said it earned $643 million, or 43 cents a share, for the three months ended Nov. 2, down from $716 million, or 46 cents a share, a year earlier.
Revenue rose to $11.6 billion from $11.2 billion a year earlier. Same-store sales, or sales in stores open at least one year, a key measure of industry performance, fell 4.3 percent.
Analysts surveyed by Thomson Financial had been looking for net income of 41 cents a share on revenue of $12.4 billion.
"Many external factors contributed to the weak sales environment, including a continuing housing correction, drought conditions in several U.S. markets, and slower than expected sales in Gulf Coast markets," Robert A. Niblock, Lowe's chairman and chief executive said in a statement accompanying the results.
"Clearly the largest of these impacts was the unstable housing environment evidenced by an even steeper decline in housing turnover, falling home prices in many markets, and a near record inventory of homes for sale."
Like Home Depot, Lowe's business relied on large remodeling and do-it-yourself projects, but with home prices falling, fewer homeowners are willing or able to pay for renovations. Revenue has been sliding for most of the year as the housing slump continued.
Recent government and industry data shows housing troubles spreading to the broader economy, putting even greater pressure on the retailers' business.
Lowe's expects to earn 25 cents to 29 cents a share for the fourth quarter. Analysts were expecting earnings of 36 cents a share. The company expects to show sales growth of 3 percent and anticipates same-store sales decline of 3 percent to 5 percent for the period.
Lowe's, which in September had predicted full-year earnings per share "at the low end" of its forecast of $1.97 to $2.01, now forecasts earnings of $1.83 to $1.87.
Its shares sank $1 to $24.01 in premarket trading Monday.
For the first nine months of the year, Lowe's reported earnings of $2.4 billion, or $1.58 per share, compared with $2.5 billion, or $1.59 per share, in 2007. Revenue rose to $37.9 billion from $36.5 billion a year earlier.