Lowe’s cites housing in 10.2% drop

Lowe’s Cos. cited a weak sales environment amid a continuing slump in the housing sector Monday as reasons for a 10.2% drop in third-quarter profit.

The nation’s second-largest home-improvement chain suggested an industry recovery won’t occur in early 2008 either as it slashed its outlook for the fourth quarter and the full year.

Its shares tumbled more than 7% Monday after hitting a new 52-week low earlier in the day.

It’s a tough time for homeimprovement retailers. Home Depot Inc., Lowe’s bigger rival, reported a 27% drop in third-quarter earnings last week and cut its full-year outlook, citing the persistent housing slump.

In a conference call with analysts, Lowe’s Chairman and CEO Robert A. Niblock blamed slowing home sales, lower home prices and tightening of credit standards; all hurt consumer spending on big-ticket items.

“Based on our results and the significant losses and write-downs announced this quarter in the banking and mortgage industries, it’s clear that the pressures on our industry and the home-improvement consumer are greater than we previously anticipated and are likely to last longer than we expected,” Niblock said.

Mooresville, N.C.-based Lowe’s said it earned $643 million, or 43 cents a share, for the three months ended Nov. 2, down from $716 million, or 46 cents, a year earlier.

Revenue rose to $11.6 billion from $11.2 billion a year earlier. Sales in stores open at least one year, a key measure of industry performance, fell 4.3%.

Analysts surveyed by Thomson Financial had been looking for net income of 41 cents a share on revenue of $12.4 billion.

Lowe’s expects to earn 25 cents to 29 cents a share for the fourth quarter. Analysts expected earnings of 36 cents a share.

Lowe’s, which in September had predicted full-year earnings per share “at the low end” of its forecast of $1.97 to $2.01, now forecasts $1.83 to $1.87.

Its shares sank $1.89, or 7.6%, to close at $23.12 Monday after falling to a 52-week low of $22.99 earlier in the day.