Lowe's profit drops 33%

From the Associated Press

Lowe's Cos. said Monday that fourth-quarter profit dropped 33%. But its stock jumped after the retailer predicted that sales, while still hurt by a soft housing market, would improve slightly in 2008.

Shares of Lowe's rose 91 cents, or 3.9%, to $24.50.

The home-improvement industry has suffered as people reduced spending on home renovations in the face of declining home values, lower sales and tighter credit requirements.

The fourth quarter is also seasonally the weakest for home-improvement retailers as the colder weather typically results in few building and renovation projects.

"Our top-line results were disappointing," said Chairman and Chief Executive Robert A. Niblock.

Mooresville, N.C.-based Lowe's said net profit in the period ended Feb. 1 fell 33.4% to $408 million, or 28 cents a share, from a year earlier. Sales remained steady at just under $10.4 billion.

Analysts surveyed by Thomson Financial had been looking for net income of 25 cents a share on revenue of $10.85 billion. Estimates usually exclude one-time items.

Same-store sales, a closely watched gauge of retail health that measures sales at stores open at least a year, declined 7.6% for the fourth quarter. The company predicted that number would drop at least 5% in the current quarter and the year.

Niblock said Lowe's would "remain focused on what we can control."

The company expects first-quarter total sales to rise about 2% on earnings of about 38 cents to 42 cents a share. Analysts have forecast earnings of 43 cents per share.

For the year, Lowe's expects total sales to increase about 3%.

Lowe's and larger rival Home Depot Inc., which will post fourth-quarter results today, have seen profits slide over the past year as a slump in the housing industry continues.

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