Lowe's 3Q sales fall short of outlook

MOORESVILLE, N.C. Lowe's today reported net earnings of $643 million for the quarter ended Nov. 2, a 10.2% decline over the same period a year ago. Diluted earnings per share declined 6.5% to 43 cents from 46 cents in the third quarter of 2006. For the nine months ended Nov. 2, net earnings declined 3.7% to $2.4 billion while diluted earnings per share declined 0.6% to $1.58.

The company reported that sales for the quarter increased 3.2% to $11.6 billion, up from $11.2 billion in the third quarter of 2006. For the nine months ended Nov. 2, sales increased 3.8% to $37.9 billion. Comparable-store sales declined 4.3% for both the third quarter and first nine months of 2007.

"Our sales for the quarter fell short of our expectations, but disciplined expense management and ongoing safety initiatives combined with rational and targeted promotions enabled us to deliver earnings per share at the low end of our guidance," explained Robert Niblock, Lowe's chairman and ceo. "Many external factors contributed to the weak sales environment, including a continuing housing correction, drought conditions in several U.S. markets, and slower than expected sales in Gulf Coast markets. Clearly the largest of these impacts was the unstable housing environment evidenced by an even steeper decline in housing turnover, falling home prices in many markets, and a near record inventory of homes for sale. Despite these factors, Lowe's continues to gain market share according to third party estimates."

Niblock added that despite the expected continued pressure on the housing industry, Lowe's remains "committed to [its] goal of providing great products and unmatched customer service and capitalizing on opportunities to ensure we gain profitable market share regardless of the level of industry growth."

For the fourth quarter of 2007, Lowe's expects total sales to increase approximately 3% and comparable-store sales to decline 3% to 5%. Diluted earnings per share are expected to be in the range of 25 cents to 29 cents.

For the fiscal year 2007, the company expects total sales to increase 3% to 4% and comparable-store sales to decline approximately 4%. Diluted earnings per share of $1.83 to $1.87 are expected for the fiscal year ending Feb. 1, 2008.