Shares of home improvement retailer Lowe's Cos. (NYSE: LOW) were trading slightly higher in early trading, despite posting a decline of 33.4% in its fourth-quarter profit. The nation's second biggest home improvement retailer reported that its quarterly profit slipped 33% to $408 million, or 28 cents a share, hurt by the weak U.S. housing market. These numbers were down $613 million or 40 cents per share reported in the same period a year ago. Despite the 33% decline, the company was still able to beat analyst estimates of 25 cents a share in the quarter.
The company showed a drop in its fourth-quarter revenue to $10.38 billion, down from $10.41 billion a year earlier. Analysts forecast revenue of $10.85 billion in the quarter, according to Thomson Financial. The drop in revenue came as the retailer had to face a difficult consumer environment brought by the U.S. housing market slowdown and credit crisis.
Continued consumers' worries over a possible recession put a curb on their spending on home renovations as manifested by the 7.6% decline in the company's same-store sales.
Looking ahead, Lowe's anticipates a challenging environment for several more quarters. This will put pressure on same-store sale, which are expected to lose at least 5% in the current quarter and for the year. However, according to Robert A. Niblock, the company's CEO, Lowe's further strategy will "remain focused on what we can control."
Based on current consumer spending and falling home prices, the company's outlook for further gains is not too encouraging. Lowe's announced it expects first-quarter earnings between 38 cents and 42 cents a share, and full-year profit in a range between $1.50 and $1.58 per share. This comes below analysts' predictions for first-quarter earnings of 44 cents per share and full-year earnings of $1.74.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
U.S. Justice Department turns an eye on the telecoms
Serious Money: Three stocks that beat the market
Closing Bell: The wishy-washy return to Q3 (AA, DDUP, EMC, DNDN, CVX, FSLR, GS)
Reader Comments (Page 1 of 1)
4-23-2008 @ 9:11AM
Richard said...
Lowe's has performed so badly over the last several years. Much of this is due to the poor management, Robert Niblock, who has failed to produce any positive results. The company has seen a dramatic drop in profits and has steadily increased their debt. Eventually that debt comes due and the bottom will fall out on the stock. Recently, the company announced that they were pulling back store openings, a smart move considering the saturation of some metropolitan markets. We need only to look back at Sears and KMart to see the effects of too many stores in close proximity to each other. These stores are expensive to build and operate, especially when the management in the stores is so poorly trained.