Housing slump hits Lowe’s

Earnings at Lowe’s Cos. fell 12.1% in its fiscal first quarter, trailing analysts’ expectations and depressing shares of the country’s second-largest home improvement retailer.

The Mooresville, N.C.-based company said mixed weather and a continued housing slump hurt sales. Rival Home Depot Inc., the nation’s largest home improvement chain, said last week that its first-quarter profit dropped 29.5%.

Lowe’s reported net income of $739 million, or 48 cents a share, for the three months ended May 4, down from $841 million, or 53 cents, a year earlier.

Revenue rose to $12.2 billion from $11.9 billion a year earlier.

Same-store sales, or sales in stores open at least one year, fell 6.3%. The company, which opened 15 stores in the quarter, had expected a same-store sales decline of 2% to 4%. The key measure of performance compared with a drop of 7.6% at Home Depot.

“Results that Lowe’s announced today reflect struggles at the company admidst a challenging environment for home retail,” UBS analyst Brian Nagel wrote in a research note. “We believe that sluggish trends at Lowe’s recently portend further weakness.”

Analysts surveyed by Thomson Financial had been looking for net income of 49 cents a share on revenue of $12.4 billion.

The retailer also cut its full-year earnings forecast. It expects to earn $1.99 to $2.03 a share in fiscal 2008, down from the $2.02 to $2.09 it predicted in February.

Lowe’s said it expected to earn 62 cents to 64 cents a share for the second quarter and show sales growth of 6% to 7%.

The company also anticipates that same-store sales will decelerate at a slower pace than in the first quarter, falling 1% to 3%.

Shares of the retailer fell 79 cents, or 2.42%, to $31.88.