Lowe’s 3Q profit falls 24 percent on slow spending
Published 12:00 am Wednesday, December 2, 2009
By ASHLEY M. HEHER
AP Retail Writer
CHICAGO (AP) – Lowe’s Cos. Inc. posted better-than-expected third-quarter results Monday, even as profit slid more than 24 percent because shoppers postponed big-ticket purchases amid growing economic uncertainty.
The nation’s No. 2 home improvement chain said it earned $488 million, or 33 cents per share during the three months ending Oct. 31 ó down from $643 million, or 43 cents per share, a year earlier.
This year’s results were helped by a sales boost from an active hurricane season along the Gulf coast, but were hurt as shoppers scaled back on purchases of large items such as kitchen cabinets.
Lowe’s larger rival, Home Depot Inc., is expected to see those same competing factors when it reports results for the third quarter on Tuesday.
Revenue at Lowe’s climbed 1.4 percent to $11.73 billion, from $11.57 billion during the same period last year. Same-store sales ó an important retail industry metric ó sank 5.9 percent.
“The third quarter continued what has been a very difficult period for our industry as many exterior factors weighed on home improvement sales,” Lowe’s Chairman and Chief Executive Robert Niblock told investors during a conference call.
Analysts surveyed by Thomson Reuters expected the company to earn 28 cents per share on revenue of $11.62 billion.
Deutsche Bank analyst Mike Baker called the third-quarter performance “relatively impressive.” RBC Capital Markets analyst Scot Ciccarelli said Lowe’s results also showed a solid balance sheet.
“(Third-quarter) sales ended up better than projected and, we suspect, much better than investors had feared,” he said in a research note published Monday. “October was challenged across the retail landscape and we believe investors were bracing for significantly lower results.”
Lowe’s shares rose $1.74, or 9.5 percent, to $19.97 in afternoon trading Monday.
The Mooresville, N.C.-based home-improvement chain told investors that sales deteriorated in the first half of November and that it expects a fourth-quarter profit between 8 cents and 16 cents per share. The company forecast 2009 profit between $1.46 and $1.54 per share.
“We know it’s a difficult environment,” Niblock told The Associated Press. “We think it is going to be a difficult environment probably through 2009, but we think if we execute well, it provides us a great opportunity to gain market share in a difficult environment.”
Analysts expect the company will earn 18 cents per share for the quarter and $1.51 per share for the year.
AP Retail Writer Lauren Shepherd in New York contributed to this report.