Loweâ€™s, the U.S. marketâ€™s second largest home improvement retailer, posted a rise in net profit for the second quarter on higher appliances sales but lowered its earnings outlook for the rest of the year.
The North Carolina-based retailer said its net income was $935 million, or 60 cents per share for the latest quarter, an 11 percent increase from a year ago. Same store sales for the quarter, a measure of sales at the same location for stores which have been open for at least one year, increased 3.3 percent. The firm missed Wall Street earnings expectations for the company of 61 cents per share.
â€œI am proud of the Lowe's team and the solid quarterly sales and earnings results delivered in a challenging economic environment, explained Robert A. Niblock, Lowe's chairman, president and CEO. â€œLowe's continued to capture market share with notable gains in Flooring, Appliances, Outdoor Power Equipment and Cabinets and Countertops in the quarter, according to third-party estimates.â€
Revenues of $13.4 billion, a rise of 2.2 percent since last year, were driven by strong employment and wage growth in the country. â€œModerate income growth and a solid employment picture are stabilizing forces for the consumer, Niblock said.
Despite the results, future threats could loom for the firm. Along with a rise in interest rates and oil prices, consumer spending has been dampened by political uncertainty.
â€œ(Currently)â€¦ a backdrop of higher energy costs and a tumultuous geo-political environment that has weighed on the consumer,â€ Niblock commented. â€œNear-term pressures on the U.S. consumer have led to a more cautious outlook for the balance of the year.â€
Earning's per share for the year will be as much as $2.07, less than the previous company expectation of $2.11.
The short term volatility will not stop the company from opening new stores. The firm plans to open 155 stores for fiscal 2006, which would cost the company $140 million. A share-buy-back scheme was also increased by up to $2 billion and will continue until 2008.