Housing market hurts Lowe's comps

MOORESVILLE, N.C. Lowe's today reported net earnings of $1.02 billion for the quarter ended Aug. 3, a 9% increase over the same period a year ago. Diluted earnings per share increased 11.7% to 67 cents from 60 cents in the second quarter of 2006. For the six months ended Aug. 3, net earnings declined 1% to $1.76 billion while diluted earnings per share increased 1.8% to $1.15.

Sales for the quarter increased 5.8% to $14.2 billion, up from $13.4 billion in the second quarter of 2006. For the six months ended Aug. 3, sales increased 4.1% to $26.3 billion. Comparable-store sales for the second quarter declined 2.6% and declined 4.4% in the first half of 2007.

"Despite the external pressures impacting our results, our continued focus on serving customers and executing our initiatives produced comparable store sales within our guidance range," explained Robert Niblock, Lowe's chairman and ceo. "Solid gross margin gains drove earnings that exceeded our guidance.

Niblock also cited economic issues, such as the housing market, as reasons for the companies performance. "Markets in California and Florida, generally considered most pressured by housing, continue to perform significantly worse than average; markets in the Northeast, while still producing negative comparable-store sales, are showing encouraging signs of improvement; and the many areas of the country where housing did not accelerate at an unsustainable rate over the past several years delivered positive comparable store sales. As expected, many of the difficult comparisons we faced during the last four quarters are beginning to lessen as we cycle hurricane recovery spending and deflationary price pressures from lumber and plywood. "