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Housing slump helps drive Lowe's profit lower, expects more same-store sales decline

Housing slump helps drive Lowe's profit lower, expects more same-store sales decline

Lowe's Cos., the second biggest U.S. home improvement retailer, said Monday that a softer housing market helped drive its fourth-quarter earnings down 33.4 percent.
The company also said it expects sales in established stores to drop at least 5 percent in the current quarter and for the year. But that would be an improvement over the 7.6 percent decline in the fourth quarter.
After opening lower, Lowe's shares rose 90 cents, or 3.8 percent, to $24.49 in morning trading Monday.
"These are bad numbers, but quite frankly, based on our conversations the last few weeks, they are not much worse than what we believe was the weak buyside expectations," wrote Banc of America analyst David Strasser in a client note.
On a conference call with analysts, Chairman and CEO Robert A. Niblock blamed slowing home sales, lower home prices and tightening of credit standards, all which hurt consumer spending on big-ticket items.
The fourth quarter is also seasonally the weakest for home-improvement retailers as the colder weather typically results in few building and renovation projects, he said.
"Our top line results were disappointing," Niblock said.
Lowe's said its profit in the period ending Feb. 1 fell to $408 million (euro275.36 million), or 28 cents a share, from $613 million (euro413.71 million), or 40 cents per share, in the prior-year period.
Sales remained virtually steady at just under $10.4 billion (euro7.02 billion).
Analysts surveyed by Thomson Financial had been looking for net income of 25 cents a share on revenue of $10.85 billion (euro7.32 billion). Estimates usually exclude one-time items.
Same-store sales _ a closely-watched gauge or retail health that measures sales at stores open at least a year _ declined 7.6 percent for the fourth quarter.
Niblock said the company will "remain focused on what we can control."
"The next several quarters will be challenging on many fronts as industry sales are likely to remain soft," he said.
The company expects first quarter total sales to rise about 2 percent on earnings of about 38 cents to 42 cents a share. Analysts have forecast earnings of 43 cents per share.
Lowe's and bigger rival Home Depot Inc., which is expected to post fourth-quarter numbers Tuesday morning, have seen profits slide over the past year as a slump in the housing industry continues.
For the year, Lowe's reported earnings of $2.8 billion (euro1.89 billion), or $1.86 (euro1.26) per share, compared with $3.1 billion (euro2.09 billion), or $1.99 (euro1.34) per share, in 2007. Revenue rose to $48.3 billion (euro32.6 billion) from $46.9 billion (euro31.65 billion) a year ago.
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On the Net:
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Updated : 2021-04-23 13:14 GMT+08:00