Retailer Lowe's Cos. reported an 18% drop in fiscal first-quarter profit Monday as the slumping U.S. housing market and soft economy hurt sales, and it cut its full-year profit forecast.
Lowe's, the second-largest home-improvement chain behind Home Depot Inc., also pared its sales-growth forecast for this fiscal year and said earnings for the current quarter would trail the year-earlier level.
"You're looking at a difficult economy," said Douglas Christopher, an analyst with Crowell Weedon & Co.
Lowe's earnings came to $607 million, or 41 cents a share, for the quarter ended May 2, compared with $739 million, or 48 cents, a year earlier.
Analysts, on average, had expected 40 cents a share, according to Reuters Estimates.
Revenue fell 1.3% to $12 billion. Sales at stores open at least a year, a key measure of a retailer's health, declined 8.4%.
The home-improvement sector has been hurt as homeowners curb big-ticket renovations in the face of falling home values, tighter credit requirements and higher prices for basic items such as food and gasoline.
"Assuming there's no other big negatives to come, hopefully we're at or near bottom [in the housing cycle]," Lowe's Chairman and CEO Robert Niblock said.
Lowe's, based in Mooresville, N.C., said it expected full-year profit per share of $1.45 to $1.55, a downward revision from its February forecast of $1.50 to $1.58 a share in February. Total annual sales are now expected to rise about 1%, down from a previous forecast of a 3% rise.
The retailer forecast profit of 54 cents to 59 cents a share for its second quarter, down from 67 cents a share a year earlier, on a total sales increase of about 1%, with same-store sales falling 6% to 8%.
Shares of Lowe's sank 64 cents to $24.25.