Lowe's and its chief rival, The Home Depot, Inc. (NYSE: HD), are finding it difficult to match sales of years past. More than 2 million households received foreclosure filings last year, and some economists estimate that as many as 1 in 4 homeowners owe more money on their mortgages than their properties are worth. And homeowners in that situation are reluctant to sink any more money into their homes for fear of not getting it back.

President Obama's $75 billion plan to help stem foreclosures to ease the housing slump isn't going to be enough to cause a dramatic turnaround in the environment, according to Lowe's Chairman and CEO Robert Niblock, but he added it does make the environment "less bad."

He says the macro environment shows few positive signs and, therefore, the company will continue to plan conservatively. The company says it will now open 60 to 70 new stores in 2009, down 15% from its estimates in the fall. It added 115 stores last year.

Gross margin fell to 33.7% in the fourth quarter from 34.9 % in the year earlier period, due mainly to price cuts on seasonal merchandise. The fourth quarter was doubly tough on Lowe's last year as it competes with a broader group of retailers for traffic, and competition was intense.

Niblock said the company chose to be more promotional than planned with its seasonal merchandise, which pressured gross margin, but did help the company's inventory position heading into fiscal '09. He said he expects the pressure on gross margin to abate in the first quarter as they were unique to the promotional activity during the holiday season.

Lowe's said its building materials business received a boost from Gulf Coast hurricane victims continuing to rebuild, and that lawn and landscape sales grew from a year ago.

However sales of other discretionary categories, such as home organization, plumbing, lighting and windows, fell to decade lows.

Lowe's has now had six consecutive quarterly declines in profit. For the current quarter it expects same-store sales to decline between 6% and 10% with earnings of 23 cents to 27 cents per share, well below the 32 cents per share profit analysts were expecting and last years' profit of 41 cents per share.

For the full year Lowe's says it will likely earn between $1.04 and $1.20 per share, well below the $1.27 per share figure analysts were expecting.

Jamie Dlugosch is a contributor to InvestorPlace.com.