Steep profit decline at Lowe’s

Fourth-quarter sales at Lowe’s declined 3.8%, and profits fell sharply, as the company suffered its biggest blow to date from a deteriorating housing market and a downturn in consumer spending. Sales for the quarter were approximately $10 billion and same-store sales declined 9.9%, while profits dropped by 60.3% to $162 million as the company was forced to engage in margin-depressing promotional activity during the fourth quarter.

Earnings per share declined 60.7% to 11 cents from 28 cents. Full-year sales were essentially flat with the prior year at $48.2 billion while full-year same-store sales declined 7.2%.

“The economic pressures on consumers intensified in the fourth quarter, resulting in a further decline in consumer confidence and dramatic reductions in consumer spending,” said Lowe’s chairman and CEO Robert Niblock. “As a result, our comparable-store sales for the quarter remained weak and fell at the low end of our expectations.”

If there was a bright spot in the quarter, Niblock pointed out that in a challenging sales environment and throughout a prolonged industry downturn, the company continues to capture market share, which he said is evidence of a compelling product offering and commitment to customer service.

Lowe’s opened 33 new stores in the fourth quarter, and, at the end of its fiscal year on Jan. 30, the company operated 1,649 stores in the United States and Canada. During the first quarter, Lowe’s is moving forward with 21 new stores and expects same-store sales to decline between 6% and 10%.