Lowe's Companies Inc. (LOW), the world's second largest home improvement retailer, on Monday reported better-than expected profit and sales for the first quarter as warm weather boosted its comparable store sales. The company, however, trimmed its full-year earnings forecast below analysts' estimates, while maintaining sales growth view.
Chairman, President and CEO Robert Niblock said, "We continue to maintain a cautious view of the housing and macro demand environment, and are focused on what we can control."
Peer Home Depot, Inc. (HD) also had reported higher first-quarter profit last week due to the warm weather, but in contrast to Lowe's, the world's biggest home improvement chain had lifted its full-year guidance.
Lowe's net earnings in the first quarter grew 14.3 percent to $527 million. Earnings per share increased 26.5 percent to $0.43 from last year's $0.34. The latest quarter results included a $0.01 per share charge related to staff reduction at the company's U.S. headquarters.
On average, 25 analysts polled by Thomson Reuters expected earnings of $0.42 per share. Analysts' estimates typically exclude one-time items.
The company noted that a shift in comparable weeks aided the first-quarter earnings by approximately $0.05 per share.
Sales increased 7.9 percent to $13.15 billion from $12.19 billion a year ago, beating analysts' estimate of $12.99 billion. The week shift aided the first quarter sales increase by $514 million or 4.2 percent.
Comparable store sales increased 2.6 percent, with U.S. business growing 2.7 percent. Gross margin, meanwhile, declined to 34.70 percent from 35.44 percent a year earlier.
Niblock noted, "We delivered solid results for the quarter, consistent with our expectation at the beginning of the year. While we capitalized on better than anticipated weather during most of the quarter, demand for seasonal products slowed toward the end."
Looking ahead, for fiscal year 2012, the company now anticipates earnings of $1.73 to $1.83 per share, compared to previous forecast of $1.75 to $1.85 per share. Analysts project full-year earnings of $1.87 per share.
Sales are still projected to increase between 1 to 2 percent on a reported basis and about 3 percent on a 52-week comparable basis. The company continues to expect comparable-store sales to increase 1 to 3 percent.
The guidance compares favorably with prior year results. In its 53-week fiscal 2011, the company had posted net earnings of $1.43 per share on sales of $50.21 billion.
The company expects to open approximately 10 stores in fiscal year 2012.
Lowe's shares closed Friday's regular trading at $28.48, down $0.11 or 0.39 percent.
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