Lowe's 1Q profit falls, but tops Wall Street view

MOORESVILLE, N.C. (AP) — Lowe's Cos., the nation's second biggest home improvement chain, said Monday that its fiscal first-quarter profit fell 22 percent but beat Wall Street's expectations and raised its full-year earnings guidance, above analysts' current estimates.

 

The news sent the company's stock up $1.65, or 8.9 percent, to $20.10 in electronic premarket trading.

 

The Mooresville, N.C.-based retailer said consumers continued to stay away from bigger-ticket housing items as they tried to shore up their savings amid the recession.

But shoppers did welcome spring with smaller, outdoor purchases.

 

Lowe's remains optimistic that economic conditions may be getting better.

 

"In recent weeks we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets, and home prices slow their decline," Chairman and Chief Executive Robert A. Niblock said in a statement.

 

Niblock noted that Lowe's will still be keeping an eye on its expenses and will "continue to plan conservatively" since many of the variables affecting the housing market are still at or near historic lows.

 

For the period ended May 1, Lowe's earnings dropped to $476 million, or 32 cents per share, from $607 million, or 41 cents per share, a year ago.

 

The results surpassed Lowe's guidance for profit of 23 cents to 27 cents per share.

Analysts had predicted net income of 25 cents per share, according to a Thomson Reuters poll. Analysts' estimates normally exclude one-time items.

 

Sales dipped 2 percent to $11.83 billion from $12.01 billion, but topped Wall Street's estimate of $11.63 billion.

 

For the full year, Lowe's increased its earnings guidance to a range of $1.13 to $1.25 per share. Its prior forecast was for profit of $1.04 to $1.20 per share.

 

The retailer's second-quarter guidance anticipates profit of 51 cents to 55 cents per share.

 

The company expects a sales decline of 2 percent to an increase of 1 percent for both the full year and the second quarter. Lowe's previously predicted full-year revenue would range from a 2 percent drop to a 2 percent increase.

 

Analysts predict 2009 net income of $1.11 per share on revenue of $47.16 billion. Second-quarter profit is expected at 50 cents per share on sales of $14.12 billion.

Lowe's forecast a same-store sales decline of 4 percent to 8 percent for both the second quarter and the year, reaffirming its full-year forecast.

 

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.

 

The chain maintained its plan to open approximately 60 to 70 new stores in fiscal 2009. If Lowe's goes ahead with the openings as planned, it will add 40 percent fewer stores in 2009 than the 115 stores it added to its portfolio last year.

 

Lowe's opened 21 stores in the first quarter and ran 1,670 stores in the U.S. and Canada as of May 1.

 

Copyright 2009 The Associated Press.