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.
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.
Angelo Young is a general assignment business reporter who joined IBTimes in April 2012. Much of his career has been behind the scenes as a copy editor, assignment editor and...