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Cold and rain put chill on Lowe's 1st-qtr profit

Cold and rain put chill on Lowe's 1st-qtr profit

May 17th, 2011 by MICHELLE CHAPMAN, AP Business Writer in News

NEW YORK (AP) - Lowe's Cos. profit fell 6 percent in the first quarter, as the bad weather that plagued much of the country kept customers away from their gardens and other outdoor projects.

The Mooresville, N.C., chain's quarterly performance missed Wall Street expectations and the nation's No. 2 home improvement retailer lowered its full-year outlook.

Lowe's results come a day before the country's biggest home improvement retailer, Home Depot Inc., reports its quarterly figures.

Both companies depend on the spring selling season to give them a boost, as shoppers typically head out in droves to buy seasonal items such as flowers, patio furniture and barbecue grills.

But cold and rainy weather across the northern half of the country and tornadoes in the Southeast have been a drag on the season so far, Lowe's said Monday.

"It's difficult to overcome Mother Nature when it comes to weather-related conditions," Chairman and CEO Robert Niblock said during an interview with the Associated Press.

While home owners dealing with flooding and tornado damage will be looking to make repairs, Niblock said any business related to that will be spread out over the long term.

Weather is not the only concern. Lowe's said customers remain wary about spending due to ongoing worries about the housing market and rising gas prices.

On Monday, the National Association of Home Builders reported that U.S. homebuilders are concerned the housing market won't recover this year, with some feeling it may be getting worse. Economists expect home prices will continue to struggle this year before a modest recovery begins.

Lowe's reported a 3.4 percent decline in traffic during the quarter, with average receipt nearly flat.

For the three months ended April 29, Lowe's net income dropped to $461 million, or 34 cents per share. A year earlier it earned $489 million, or 34 cents per share, a year earlier.

Revenue dipped 2 percent to $12.19 billion, as sales of outdoor items fell.

Revenue at stores open at least a year slipped 3.3 percent. The latter metric is a key indicator of a retailer's health because it excludes results from stores opened or closed during the year.

Analysts polled by FactSet expected higher earnings of 36 cents per share on revenue of $12.54 billion.

Lowe's first-quarter earnings came in at the low end of its projected guidance of 34 cents to 38 cents per share. Its stock declined 92 cents, or 3.6 percent, to $24.84.

Lowe's cautioned in February that consumers were still holding back on big projects.

The chain was also up against a difficult comparison with last year, when shoppers took advantage of federal cash-for-appliances rebates, Niblock said.

For the full year, Lowe's now expects earnings of $1.56 to $1.64 per share and a revenue increase of about 4 percent, implying revenue of about $50.79 billion.

The retailer previously forecast earnings of $1.60 to $1.72 per share on a 5 percent revenue increase.

Analysts predict full-year earnings of $1.70 per share on revenue of $50.9 billion.

Lowe's anticipates second-quarter earnings of 65 cents to 69 cents per share, with revenue up about 4 percent, implying revenue of about $14.93 billion.

Wall Street expects earnings of 68 cents per share on revenue of $14.82 billion.

The retailer anticipates the second half of the year being stronger than the first, as it will no longer face comparisons that include government stimulus programs.

Lowe's ran 1,751 stores in the U.S., Canada and Mexico as of April 29.