Net income was $476 million, or 32 cents per share, down from $607 million, or 41 cents, a year earlier. Sales fell 1.5 percent to $11.8 billion, according to Mooresville, North Carolina-based company. The results beat Bloomberg forecasts of profit of 26 cents on revenue of $11.6 billion. Shares of the number two home improvement retailer soared on the news.
"Gross margin was a concern coming out of last quarter," David Schick, an analyst at Stifel Nicolaus & Co. in Baltimore, told Bloomberg News. "This was a big move and it indicates they were better at selling seasonal goods. Anybody can cut costs to make a quarter."
Chief Executive Robert Niblock further warmed the hearts of investors by saying in the earnings press release that the company had seen an improvement in consumer confidence and that gains in "housing turnover show signs of a bottom in certain markets, and home prices slow their decline."
Quarterly comparable store sales for the second quarter are expected to fall four percent to eight percent. Earnings are expected to be 51 cents to 55 cents, better than analysts' estimates. For the year, total sales are expected to be little changed, ranging between a decline of two percent to an increase of one percent. Earnings of
As Niblock points out, there are positive signs that sales at Lowe's sales will rebound as people fix up their homes before putting them up for sale. Homeowners also may be starting home improvement projects that had been delayed because of worries about the economy. Lowe's is prepared to capitalize on these trends.
During the last quarter, the company opened 21 new stores and expects to open another 21 locations during the current quarter and 60 to 70 stores during the year.