Sandy Rebuilding Efforts Boost Lowe's Sales
Lowe's reported a higher-than-expected quarterly profit on Monday as preparation and rebuilding efforts tied to superstorm Sandy boosted business at the world's No. 2 home improvement chain, which raised its full-year sales forecast.
After the earnings announcement, the home improvement company's shares rose nearly 5 ercent in pre-market trading.
The company said sales had risen 1.9 percent to $12.1 billion in the third quarter ended Nov. 2, while analysts on average expected $11.9 billion, according to Thomson Reuters I/B/E/S.
Sales at stores open at least year rose 1.8 percent both globally and in the United States, an improvement over the previous quarter, when same-store sales fell.
Lowe's now expects total sales for the year ending on Jan. 31 to be up 2 percent, excluding the effect of an extra week, compared with an earlier forecast of a 1 percent rise.
Still, for the 14th straight quarter, Lowe's same-store sales lagged those of larger rival Home Depot . The industry leader last week raised its full-year outlook independently of any future sales lift from Sandy, as it benefited from a recent uptick in the U.S. housing market.
While Home Depot's third quarter ended before Sandy battered the U.S. Northeast, Lowe's third quarter ended a few days after the superstorm made landfall on Oct. 29, killing dozens and leaving millions without electricity for days.
Net income rose to $396 million, or 35 cents per share, from $225 million, or 18 cents per share, a year earlier.
Excluding some items like write-downs and a charge for a discontinued project, the profit came to 40 cents a share, 5 cents higher than analysts' estimates.
But the Mooresville, North Carolina-based company gave a cautious forecast. It affirmed its outlook from August that its full-year profit would come to $1.64 a share, which is 2 cents below what Wall Street was projecting.
Lowe's has cut jobs, curbed store expansion and streamlined its supply chain to reduce costs and compete better with Home Depot, but it has yet to see the efforts bear fruit.
Home Depot has won shoppers from Lowe's by offering better pricing and service, while Lowe's strategy of "everyday low prices" rather than promotions has driven some customers away.
Lowe's Chief Executive Officer Robert Niblock said in August that the company's current "transformation phase" would probably not end until mid-2013. In a statement on Monday, he said his company's execution of the transformation was "improving."