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Lowe’s Profit Tops Estimates

August 22, 2008

CHICAGO (AP)– Repairs to drought-stricken flower beds and sales of freezers designed to hold bought-in-bulk food helped Lowe’s Cos. Inc. post a better-than-expected second-quarter profit.

But the nation’s faltering economy and sluggish housing industry still sent profit at the nation’s second-largest home improvement chain down nearly 8 percent.

For the three months ending Aug. 1, results were boosted in part by consumers who undertook small outdoor gardening projects — repairing their yards from last year’s drought — and bought freezers to accommodate bulk food purchases to cope with soaring grocery prices.

At the same time, Lowe’s executive said, shoppers are beginning to buy pellet heaters in anticipation of higher fuel costs this winter.

“It was a tough environment out there,” said Chairman and CEO Robert Niblock. “I’m real proud of the team and the results we delivered in light of the environment.”

Analysts said the second-quarter sales boost likely wasn’t sustainable, as penny-pinching homeowners scale back spending and do- it-yourself projects. It’s a sentiment the Mooresville, N.C.-based company echoed as it lowered its third-quarter forecast, while raising its full-year outlook.

Lowe’s earned $938 million, or 64 cents per share, in its second quarter. That’s down from $1.02 billion, or 67 cents per share, in the same period last year. Sales rose 2.4 percent to $14.5 billion.

The home improvement store said “relative” strength in seasonal lawn and garden and nursery sales gave the company a welcome boost.

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