Lowe's Companies Inc. (LOW) reported Monday a lower-than-expected profit and sales for its second quarter partly due to a shift in comparable weeks. The home improvement retailer also trimmed its fiscal 2013 forecast for earnings and sales.
Lowe's chairman, president and CEO Robert Niblock said, "Our results fell short of our overall expectations...while we recognize the significant magnitude of change that we've asked the organization to absorb as we transform our business, we fully understand that we must improve our level of execution."
While announcing its first-quarter results back in May, Lowe's had trimmed its full-year earnings forecast, noting cautious view of the housing and macro demand environment.
In pre-market activity, Lowe's shares lost $1.57 or 5.63 percent, and are currently trading at $26.30.
In contrast, peer Home Depot Inc. (HD) in mid August reported a better-than-expected profit for its second quarter as comparable store sales were benefited by continued demand for core products. The company also lifted its fiscal 2012 earnings view, while backing sales forecast.
For the second quarter, Lowe's net earnings fell 10 percent to $747 million from last year's $830 million, with an unchanged earnings per share of $0.64.
The latest quarter results included a $0.01 per share charge related to a previously announced reduction in staff at U.S. headquarters.
On average, 24 analysts polled by Thomson Reuters expected earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude one-time items.
Lowe's noted that its quarterly comparisons in 2012, which is a 52-week year, compared to last year's 53 weeks, are impacted by a shift in comparable weeks. This negatively impacted earnings per share by approximately $0.03.
Net sales dropped 2 percent to $14.25 billion, while analysts were looking for revenues of $14.46 billion. The company said the week shift accounted for $259 million or 1.8 percent of the total sales decline.
Comparable store sales edged down 0.4 percent, while comparable store sales for the U.S. business decreased 0.2 percent.
Gross margin was 33.93 percent, lower than 34.49 percent a year earlier.
As of August 3, Lowe's operated 1,748 stores in the United States, Canada and Mexico.
Looking ahead to fiscal year ending February 1, 2013, Lowe's now expects earnings per share of around $1.64, lower than previous forecast in a range of $1.73 to $1.83 per share. Analysts project full-year earnings of $1.80 per share.
Fiscal 2012 sales are now expected to be approximately flat on a reported basis, and up about 1 percent on a 52 versus 52-week basis. This is in comparison to previous forecast of an increase between 1 to 2 percent on a reported basis and about 3 percent on a 52-week comparable basis.
Lowe's also trimmed its forecast for comparable store sales growth to about 0.5 percent from previous growth projection of 1 to 3 percent.
Meanwhile, the company continues to expect to open nearly 10 stores in fiscal 2012.
In its 53-week fiscal 2011, the company had posted net earnings of $1.43 per share on sales of $50.21 billion.
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