Lowe’s Cos. Inc., the nation’s second biggest home improvement retailer, said Friday its fourth-quarter profit dropped 60 percent and forecast 2009 earnings that are short of Wall Street’s expectations.
The latest results narrowly missed analysts’ estimates as consumers spent less on items for their houses amid a deepening recession.
Earnings declined to $162 million, or 11 cents per share, in the three months ending Jan. 30, from $408 million, or 28 cents per share, during the same period last year.
The Mooresville, N.C.-based retailer said revenue fell 4 percent to $9.98 billion from $10.4 billion a year ago.
Analysts surveyed by Thomson Reuters expected a profit of 12 cents per share on revenue of almost $10.1 billion. Those estimates typically exclude one-time items.
Lowe’s said it faced intense competition during the holiday season and had to make more aggressive discounts on seasonal products, which squeezed gross margins, but helped it reduce inventory in stores.
Quarterly same-store sales dropped 9.9 percent. Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
“The economic pressures on consumers intensified in the fourth quarter, resulting in a further decline in consumer confidence and dramatic reductions in consumer spending,” Robert A. Niblock, Lowe’s chairman and CEO, said in a statement. “As a result, our comparable store sales for the quarter remained weak and fell at the low end of our expectations.”
Deutsche Bank analyst Mike Baker told investors that expectations for Lowe’s results were already dampened.
“(The) comp (was) actually not as bad as some had expected, we believe,” he wrote in a research note.
The company opened 33 new stores in the fourth quarter, bringing its North American store count to 1,649 locations.
For the year, Lowe’s profit declined 22 percent to $2.2 billion, or $1.49 per share. That’s down from a profit of $2.81 billion, or $1.86 per share, in the prior year.
Annual revenue dipped to $48.2 billion from $48.3 billion. Same-store sales for 2008 fell 7.2 percent.
Meanwhile Friday, Lowe’s forecast 2009 earnings of $1.04 to $1.20 per share. Analysts predict a full-year profit of $1.27 per share.
Full-year revenue is predicted to range from a 2 percent drop to a 2 percent increase, while same-store sales are forecast to slip 4 percent to 8 percent.
The company anticipates first-quarter net income of 23 cents to 27 cents per share. Revenue is expected to range from a 3 percent decline to a 1 percent increase.
Quarterly same-store sales are estimated to drop 6 percent to 10 percent.
Analysts had expected first-quarter earnings of 32 cents per share.
