Lowe’s Profit Up 20%; Limited and Toys R Us Falter

Lowe’s Cos. said fiscal first-quarter profit rose 20%, beating forecasts as the second-largest home-improvement chain controlled costs and increased sales.

Meanwhile, Limited Inc.’s profit fell by about half and Toys R Us Inc. had a wider-than-expected loss.

Lowe’s, which trails sales by Home Depot Inc., sold more wires, pipes, floor tiles and bathroom fixtures. New stores and an extra week in the quarter helped boost revenue 18%.

Limited’s profit was dragged down by declining demand for spring fashions and a 48% decline in profit at its majority-owned Intimate Brands Inc., the operator of the Victoria’s Secret chain.

Sluggish sales of swing sets and bicycles, and costs to renovate stores and train staff, hurt Toys R Us.

“Some companies are able to rise above the tough environment; the best ones do,” said analyst Marty Bukoll of Northern Trust Corp. in Chicago. “They take advantage of what business there is, and they redirect their merchandise even if the weather is bad or consumer spending is slow.”

Net income at Lowe’s rose to $225.3 million, or 58 cents a share, from $187.1 million, or 49 cents, a year earlier. That topped the 54-cent average estimate of analysts polled by First Call/Thomson Financial.

Lowe’s sales in the quarter ended May 5 rose to $5.28 billion from $4.47 billion. Sales at stores open at least a year fell 3%, hurt by lower lumber prices, cool March weather and the slowing economy, analysts said.

Shares of Wilkesboro, N.C.-based Lowe’s, which has 680 stores, rose $4.10, or 6%, to $72.50 in New York Stock Exchange trading.

Limited’s net income fell 51% to $30.7 million, or 7 cents a share, from $63 million, or 14 cents. Sales in the quarter ended May 5 were relatively unchanged at $2.13 billion.

Same-store sales fell 2% in the quarter, breaking a streak of at least six quarterly increases.

Intimate Brands’ net income dropped to $35.1 million, or 7 cents a share, from $67.9 million, or 13 cents. Revenue at the biggest U.S. lingerie retailer fell 1.6% to $1.03 billion. Same-store sales declined 7%.

First-quarter per-share earnings at Limited and Intimate Brands met the average 7-cent estimates of analysts polled by Thomson Financial. Limited has an 84% stake in Intimate Brands.

The Columbus, Ohio-based companies forecast that per-share earnings will fall significantly in the second quarter and will be down slightly for the year.

Analysts’ average profit estimates for Limited are 14 cents in the second quarter and 97 cents for the year, according to Thomson Financial.

Limited’s stock was unchanged at $17.10 on the NYSE.

The retailer owns 2,716 stores under the Limited, Express, Lerner New York, Lane Bryant, Structure and Henri Bendel names.

Intimate Brands stock was off 24 cents to $16.20 on the NYSE.

Toys R Us had a loss of $18 million, or 9 cents a share, compared with analysts’ 6-cent forecast. A year ago, the company had profit from operations of $15 million, or 6 cents a share.

Revenue at Toys R Us fell 11% to $2.06 billion in the quarter ended May 5. U.S. sales at stores open at least a year declined 2%.

Chief Executive John Eyler has been trying to lift sales and improve customer service at Toys R Us, which lost its spot as the biggest U.S. toy seller to Wal-Mart Stores Inc. in 1998.

In the quarter, the Paramus, N.J.-based company remodeled about 90 stores, hired salespeople and added products sold exclusively at Toys R Us stores. As many as 60 stores will be under construction at any given time through the end of the company’s third quarter.

The company is “really positioning itself for the fourth quarter where they make most of their money anyway,” said analyst Richard Zimmerman at Janney Montgomery Scott.

Toys R Us shares rose $2.37 to $30.96 on the NYSE. The company has 1,584 stores worldwide.