"So much inflation" that : Lowe's uses the word "deflation" in their commentary on latest earnings news.
May 21, 2007 7:52 a.m.
Lowe's Posts 12% Drop in Net, Cuts Guidance for Full Year
By JOSEE ROSE
Lowe's Inc.'s fiscal first-quarter net dropped 12%, as the country's second-largest home-improvement retailer missed both internal and Street expectations and cut its fiscal-year earnings guidance.
Chairman and Chief Executive Robert A. Niblock said the quarter was hurt by a difficult housing market, "tough comparisons to hurricane rebuilding efforts and significant lumber and plywood price deflation." He also said bad weather in April more than offset solid sales gains in March.
Mr. Niblock said Lowe's sales performance should "improve as the year progresses." Last quarter, the company provided investors hope that housing struggles were coming to an end, saying sales trends bottomed out and talked of gradual improvement throughout the year.
The Mooresville, N.C., company said net income for its first quarter ended May 4 fell to $739 million, or 48 cents a share, from $841 million, or 53 cents a share, a year earlier. This fell below the company's internal guidance of 49 cents to 51 cents a share. Revenue rose 2.1% to $12.2 billion from $11.9 billion a year ago, while same-store sales fell 6.3% in the quarter.
Lowe's had expected a same-store sales decline of 2% to 4% for the quarter.
On average, analysts polled by Thomson Financial expected earnings of 49 cents a share and revenue of $12.4 billion.
Looking ahead, Lowe's expects second-quarter total sales to increase 6% to 7% and same-store sales, or sales at stores open at least a year, to fall 1% to 3%. The company expects earnings of 62 cents to 64 cents a share. On average, analysts expect earnings of 60 cents a share.
Lowe's also expects fiscal-year total sales to increase about 7% while same-store sales are expected to fall 1% to 2%. The company previously expected same-store sales to be flat to up 2% for the year.
The company cut its full-year earnings of $1.99 a share to $2.03 a share, from $2.02 to $2.09 a share. Wall Street is expecting earnings of $2.01 a share. The company still expects to open 150 to 160 stores.
Last week, rival Home Depot's chief executive said the home-improvement market will remain soft throughout 2007." Home Depot said first-quarter net income dropped 30%.
Write to Josee Rose at josee.rose@dowjones.com
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