Retailer Lowe's Cos Inc said on Monday its third-quarter profit fell 10 percent and it cut its full-year forecast as the U.S. housing slump hurt sales, sending its shares down more than 5 percent.
Results at home improvement retailers have weakened as slowing home sales, lower home prices and tightening of credit standards hurt consumer spending on big-ticket projects such as kitchen renovations.
Lowe's, which had earlier cut its full-year outlook in late September, said during its conference call that re-setting adjustable-rate mortgages and rising energy costs were other pressures on consumers.
The second-biggest home improvement chain behind Home Depot Inc said earnings came to $643 million, or 43 cents a diluted share, for the quarter ended November 2, from $716 million, or 46 cents a share, a year earlier.
Excluding a 5 cents a share reduction in insurance liabilities tied to workers compensation, profit was 38 cents a share, below the 41 cents a share analysts expected, according to Reuters Estimates.
While Lowe's had commented on weaker-than-expected September trends, the miss vs. guidance suggests the environment deteriorated markedly through the quarter, Sanford Bernstein analyst Colin McGranahan said in a research note.
Total sales rose 3.2 percent to $11.6 billion, short of analysts' expectations of $11.78 billion, according to Reuters Estimates.
Sales at stores open at least a year fell 4.3 percent. Lowe's cited lower home sales and falling home prices, drought conditions in the U.S. South and lower-than-expected Gulf Coast sales.
Still, Lowe's said independent estimates showed it was gaining market share.
Gross margin shrank to 34.27 percent of sales from 34.47 percent a year earlier, as Lowe's cut prices on seasonal goods such as air conditioners to spur sales.
Home Depot posted a 27 percent fall in quarterly profit last week and forecast a steeper fall in earnings for the full year. The Atlanta retailer said it was continuing to lose home improvement market share, though at a lower rate compared with the year earlier.
Lowe's, based in Mooresville, North Carolina, expects pressures from the U.S. housing slump to extend well into next year.
It forecast per-share profit of 25 cents to 29 cents for the fourth quarter and $1.83 to $1.87 for the full year ending in February. In late September, Lowe's had said full-year profit would come in at the low end or slightly below a prior forecast of $1.97 to $2.01 a share.
Analysts currently expect profit of 36 cents a share for the fourth period and $1.93 a share for the year, according to Reuters Estimates.
Lowe's shares were down $1.29, or 5.1 percent a share, to $23.72 in morning New York Stock Exchange trading, while Home Depot was off 64 cents, or 2.2 percent, to $28.43.
Lowe's stock has fallen 23 percent this year, while Home Depot is down 29 percent.