Lowe Reports Rise in Profit, Despite Woes in Housing on Home Services

Dec

Lowe Reports Rise in Profit, Despite Woes in Housing

posted by admin in Home Depot

The Lowe Companies reported a higher-than-expected second-quarter profit and a gain in market share on Monday, saying that sales trends were improving in some regions despite the soft housing market.

Lowes sees pockets of strength, and I think thatâ€™s a bullish signal because lots of investors feared that nobody could pinpoint the bottom of this housing market, said Stephanie Hoff, senior retail analyst with Edward Jones in St. Louis.

The company, which ranks second behind Home Depot in home improvement retailing, said it faced easier sales comparisons, but it still cut its full-year outlook.

Earnings for the second quarter, which ended Aug. 3, rose 9 percent, to $1.02 billion, or 67 cents a share, from $935 million, or 60 cents a share, in the period a year earlier. Analysts had expected 61 cents a share, according to Reuters Estimates.

Lowes said gross margin improved in the quarter on better management of imported products and distribution.

Sales rose 5.8 percent, to $14.17 billion, aided by the opening of 26 stores. Sales at stores open at least a year fell 2.6 percent, in line with the companys expectations of a drop of as much as 3 percent.

While falling sales and prices for homes and the troubles in the subprime mortgage market have pressured the home improvement sector, Lowes turned in better results than Home Depot, which said last week that quarterly earnings fell 15 percent on a 2 percent sales drop.

Home Depot mentioned that they continue to lose market share but at a declining rate, said Sarah Henry, an analyst with MFC Global Investment Management in Berwyn, Pa., which owns stock in both chains. Lowes said that they have continued to gain market share.