Lowe's Posts Higher Second-Quarter Profit; Cuts Year Outlook

Monday, 20 Aug 2007 | 10:41 AM ET

Retailer Lowe's reported a better-than-expected 9% rise in second-quarter profit, aided by new store openings and market share gains, boosting its shares more than 6 percent Monday.

Ben Margot

The second-largest home improvement retailer behind Home Depot said difficult sales comparisons were starting to lessen but still cut its full-year profit and sales forecast.

Earnings came to $1.02 billion, or 67 cents a share, in the quarter ended Aug. 3, compared with $935 million, or 60 cents a share, a year earlier.

Total sales rose 5.8% to $14.2 billion, aided by the opening of 26 new stores. Sales at stores open at least a year, an important retail measure, fell 2.6%.

Lowe's called the current sales environment "challenging" as the soft U.S. housing market depressed results in some regions, but said it did gain market share. It also said gross margin improved.

It said areas of the country where housing hadn't accelerated too much in recent years delivered positive same-store sales.

The company forecast per-share profit for the full year in the range of $1.97 to $2.01, down from a May expectation of $1.99 to $2.03. Full-year sales are now expected to rise about 6% compared with a gain of about 7% forecast in May.

Lowe's forecast a third-quarter profit of 43 to 45 cents a share.

Analysts current expect profit of 47 cents a share for the third quarter and $1.97 for the year, according to Reuters Estimates.

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