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Shares of Lowe's Fall Despite 20 Per Cent Gain in Quarterly Profit

Posted on: Monday, 15 August 2005, 15:00 CDT

CHARLOTTE, N.C. (AP) - Fuelled by the United States' strong housing market, second-quarter profit for No. 2 home-improvement retailer Lowe's Cos. jumped 20 per cent, beating Wall Street estimates.

Despite the strong results, shares in the company fell Monday.

Net income grew to $838 million US, or $1.05 per share, in the period ended July 29, from $700 million, or 87 cents per share, in the same quarter in 2004, the company said Monday. Revenue rose 17 per cent to $11.93 billion from $10.17 billion as sales at stores open at least a year increased by 6.5 per cent.

Analysts surveyed by Thomson Financial expected earnings of $1.02 per share on revenue of $11.81 billion.

Shares of Mooresville, N.C.-based Lowe's fell 14 cents US to $65.05 in early afternoon trading on the New York Stock Exchange.

The decline could have been caused by investors disappointed with the company's conservative earnings outlook for the third-quarter, said analyst Brian Postol of A.G. Edwards & Sons.

"They did very well this quarter, and that was evident in their sales and earnings," he said. "Their numbers slowed a little bit at the tail end of the quarter. But they accelerated above their expectations, which shows they are taking market share (from Home Depot.)"

Lowe's, which has said it will open six to 10 stores in the Toronto area starting in 2007, said earnings per share will be between 76 cents and 78 cents US in the third quarter and $3.31 to $3.37 for the year. The consensus estimate of analysts is for earnings of 76 cents a share in the third quarter and $3.29 per share for all of 2005.

Market leader Home Depot, based in Atlanta, reports its second-quarter earnings Tuesday.

Gains in installed items, special orders and sales to commercial business customers helped boost results, the company said.

Same-store sales increased as "homeowners completed some of their spring weather-delayed projects," chairman and CEO Robert Niblock told analysts during a conference call after the results were posted.

Lowe's opened 27 stores, including one relocation, in the second quarter. The company said it expects to open 150 stores by the end of 2005, including 34 in the third quarter.

As of last month, Lowe's operated 1,138 stores in 49 U.S. states.

Source: Canadian Press

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