Home improvement retailer Lowe's Companies Inc. (NYSE: LOW) reported first-quarter net income rose 14.4 percent but downgraded its estimated earnings for the year on concerns over momentum in the U.S. housing market on Monday.
Lowe's shares shed $2.88 to close Monday at $25.60 after the retailer forecast it would miss a prior yearly earnings estimate. Shares of its bigger rival, Home Depot (NYSE: HD), rose 56 cents to close at $47.61.
Net income for the quarter ended May 4 rose nearly 27 percent to $527 million, or 43 cents a share, from 34 cents a year ago. Analysts had expected earnings of 42 cents.
Revenue rose 8 percent to $13.2 billion from $12.2 billion for the Mooresville, N.C..-based retail giant. Unusually warm weather helped boost sales as consumers got started earlier than usual on springtime home-improvement projects.
While we capitalized on better-than-anticipated weather during most of the quarter, demand for seasonal products slowed toward the end, said CEO Robert A. Niblock.
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Lowe's is eyeing the possibility of cautious consumer activity for the rest of the year. The company is also concerned about a general U.S. economic slowdown. That's why it lowered its per-share earnings forecast by two cents, to $1.73 to $1.83 a year ago..
We continue to maintain a cautious view of the housing and macro-demand environment, and are focused on what we can control, Niblock added.
The company's fiscal year, which closes on the Friday nearest the end of January, ended a week earlier in 2011, helping to boost the quarterly earnings by $514 million, or 4.2 percent. Pre-tax earnings were adversely affected by $17 million incurred in reducing staff at headquarters.
Lowe's, the world's second-biggest home improvement retailer, operates 1,747 stores in North America. The company has a market capitalization of $30.5 billion. Until Monday's plunge, the shares had gained about 13 percent this year.
Last week, the company's main rival, Home Depot, reported first-quarter revenue rose 6 percent while its net income gained 28 percent over year-earlier results.