Lowe’s Earnings Jump as Revenue Climbs 17%

Lowe’s Cos., capitalizing on a surprisingly strong housing market, reported a 46% increase in its fiscal fourth-quarter earnings Monday, easily surpassing Wall Street’s expectations.

Shares in the company rose nearly 6%.

The nation’s second-largest home improvement chain behind Home Depot Inc. also offered an upbeat profit outlook, projecting that earnings for the year will beat analysts’ current forecasts.

Wilkesboro, N.C.-based Lowe’s earnings rose to $319.4 million, or 40 cents a share, for the three months ended Jan. 31, from $218.4 million, or 28 cents a share, a year earlier.

Analysts surveyed by Thomson First Call anticipated earnings of 33 cents a share.

Lowe’s fourth-quarter revenue increased 17% to $6.12 billion from $5.25 billion a year earlier. Sales at stores opened at least a year, known as same-store sales, increased 4.1%. Same-store sales are considered a significant gauge of a retailer’s health.

“Lowe’s is executing extremely well across the board from merchandising to store operations to logistics and finance,” said analyst David Campbell, who follows Lowe’s for Davenport & Co. in Richmond, Va. “They’ve also recognized consumers’ desire to invest in their home,” he said. “They’ve given them reasons to shop at Lowe’s by offering a wide variety of products across the various price points.”

Lowe’s is gaining ground on market leader Home Depot, which last week warned of modest profit growth this year. Home Depot, based in Atlanta, releases its fourth-quarter and year-end 2002 results today.

“The year ahead holds challenges, but many signs point to a strong home improvement market,” said Robert Tillman, chairman and chief executive. “Despite the uncertainties that remain in the broader economic and geopolitical environment, I’m optimistic that the home improvement consumer will remain resilient.”

Lowe’s shares rose $2.08 to $38.10 on the New York Stock Exchange.

For 2002, net income grew 43.8% to $1.47 billion, or $1.85 a share, from $1.02 billion, or $1.30, in 2001. Sales increased 19.8% to $26.5 billion from $22.1 billion a year earlier. Same-store sales rose 5.6% for the year.

Tillman said despite waning consumer confidence and the possibility of war in Iraq, 2002 was “the best year in our 57-year history.”

He called the home improvement market the “sweet spot” in the economy, helped by low mortgage rates and strong demand for refinancing. And he expects the current trends to continue well into 2003.

Looking ahead, the company forecasts earnings of $2.16 to $2.20 for the current fiscal year, above analyst projections of $2.11.

The company projects that first-quarter earnings will be 51 cents to 53 cents a share. Analysts expect 51 cents.