Lowe's earnings fell 7.9 percent, to $938 million, or 64 cents a share, during the second quarter, the Mooresville-based home improvement retailer announced today.
That's better than the 56 cents a share analysts had predicted, but nonetheless shows how the slump in the housing market continues to affect companies that are closely tied to it. Lowe's reported net income of $1.02 billion during the same period last year.
Sales increased to $14.5 billion, up 2.4 percent from $14.1 billion, during the three months that ended August 1. But sales at stores open a year or more, an important gauge of retail performance, declined 5.3 percent, and the company is projecting same-store sales will be down 6 to 7 percent for the year as a whole.
Markets hit hard by the housing downturn, such as California, Florida, the Gulf Coast, Arizona and Las Vegas, fared particularly poorly, with double-digit sales declines compared with the same time last year. The center of the country, including Texas, Oklahoma and parts of the Ohio Valley and upper Midwest, performed best, Lowe's officials said during a conference call this morning.
In only two of the retailer's 20 product categories – rough plumbing and nursery products – were sales up over the same time last year, president and COO Larry Stone said in a conference call this morning. However, sales of seasonal lawn and garden products were a relative strength during the quarter, and the company also believes it benefited from the federal economic stimulus rebates.
Neither of those will be as much of a factor heading into the fall, though. And bigger-ticket purchases continue to lag, especially in markets suffering most from the housing downturn, chairman and CEO Robert Niblock said.
The company expects positive turnaround as the housing market begins to recover, although it's unclear when that will occur. Economists have said they expect the market could begin to stabilize by about the middle of next year, an estimate that Niblock said sounded about right to him. “We're just trying to find the bottom in housing turnover, certainly, so we can start forecasting an upward trend,” he said during this morning's conference call.
The performance of the housing market will also help determine Lowe's future expansion plans, officials said. The company is opening 120 stores this year, after putting plans for about 25 others on hold, and will discuss numbers for next year at an analyst and investor conference next month.