The Lowdown On Lowes

NEW YORK (MarketWatch) - Lowe's Cos., the No. 2 U.S. home-improvement retailer, said Monday that its first-quarter profit dropped 18%, hurt by the declining housing market and a spate of other economic worries that cut into consumers' discretionary spending. The company lowered its full-year outlook.

Lowe's shares dropped 3.6% in pre-market trading. They have lost 24% of their value the past year.
Net income dropped to $607 million, or 41 cents a share, from $739 million, or 48 cents a share, in the year-earlier period, the Mooresville, N.C.-based company said. Sales fell 1.3% to $12 billion in the quarter, while same-store sales decreased 8.4%. :
Lowe's Companies, Inc forecast per-share profit of 54 cents to 59 cents for the second quarter and $1.45 to $1.55 for the year with continued declines in comparable-store sales expected. In February, its outlook for the fiscal year ending Jan. 30 was pegged at $1.50 to $1.58.
Analysts, on average, expected the company to earn 40 cents a share in the first quarter, 56 cents in the second quarter and $1.54 for the year, according to FactSet Research. First-quarter sales missed analysts' estimates of $12.4 billion, according to FactSet.
"No signs yet of a recovery," said Deutsche Bank analyst Mike Baker in a report. "We don't believe investors were looking for much improvement, but we have yet to see trends get 'less worse.'"

The challenging economic environment of the past six quarters continued into the first-quarter, leading Lowe's to miss its own sales plan, the company said. Lowe's said it is controlling expenses and has gained market share, even against the backdrop of rising food and fuel prices and housing-market malaise.

Home Depot, Inc Lowe's larger rival, also has been hurt by the housing and economic downturns. Home Depot, which reports quarterly results Tuesday, said earlier this month it would slow its new-store growth, abandoning plans to add about 50 U.S. stores to save cash for existing locations as part of its strategy to improve customer service and remodel stores after it had lost market share to Lowe's. See full story.
First quarter gross margin at Lowe's narrowed to 34.69% from 34.99%. Total expenses rose to 26.59% of sales from 25.20% as the company is on track to open about 120 stores this year