Lowe’s, Target report drops in profits

Lowe’s Cos., the second-largest U.S. home-improvement retailer, and Target Corp. posted fiscal third-quarter profits Monday that fell less than analysts had estimated after the companies reduced spending.

Lowe’s forecast full-year earnings that exceeded some analysts’ estimates. Target, the second-biggest U.S. discount chain, said it would suspend its share-buyback program and cut capital spending by $1 billion to conserve cash.

Shoppers concerned about their jobs and deteriorating housing values have stopped buying nonessentials and postponed larger home-improvement projects. With sales slumping, Lowe’s, Target and other retailers have responded by curbing store openings in an effort to maintain profit margins.

Lowe’s said earnings for the year that ends Jan. 30 might decline to $1.46 to $1.54 a share, less than the $1.48 to $1.56 it projected in September. Analysts surveyed by Bloomberg estimated $1.51.

Fiscal third-quarter net income slid 24% to $488 million, or 33 cents a share, from $643 million, or 43 cents, a year earlier, Mooresville, N.C.-based Lowe’s said. Sales for the three months ended Oct. 31 rose 1.4% to $11.7 billion. Analysts surveyed by Bloomberg estimated profit of 28 cents a share.

Lowe’s shares climbed 76 cents, or 4.2%, to $18.99.

Target, based in Minneapolis, said net income decreased 24% to $369 million, or 49 cents a share, in its quarter ended Nov. 1 from $483 million, or 56 cents, a year earlier. Profit beat analysts’ estimates by 1 cent.

Revenue, including credit-card income, rose 1.9% to $15.1 billion. Target’s sales at stores open at least a year fell 3.3% in the quarter, compared with a 2.7% gain at Wal-Mart Stores Inc.’s U.S. stores.

“Right now, the consumer is very hesitant,” Chief Executive Gregg Steinhafel said on a conference call with analysts. “They’re very stressed.”

If sales at stores open at least a year decline in the “mid-single digits,” Target may earn 90 cents to $1 a share in the current quarter, Chief Financial Officer Douglas Scovanner said. Analysts surveyed by Bloomberg estimated profit of $1.22.

Target shares fell $1.35, or 4.1%, to $31.68.