Shares of Lowe's, the second-largest home improvement chain, rose 2.1 percent in early trading on Monday. Market leader Home Depot
Lowe's said it still expected sales at stores open at least a year to rise about 2 percent for the fiscal year, which some analysts viewed as a good sign given persistently soft U.S. consumer sentiment.
JPMorgan analyst Christopher Horvers said Lowe's should be able to meet that same-store sales goal as consumers resume projects to maintain or repair their homes.
We await more discretionary larger-ticket projects that would further accelerate same-store sales growth, he said in a research note.
Horvers also applauded Lowe's for clearing inventory in the quarter, helping gross margin to rise slightly.
Net income rose to $832 million, or 58 cents a share, in the second quarter ended on July 30 from $759 million, or 51 cents a share, a year earlier.
Analysts on average were expecting 59 cents a share, according to Thomson Reuters I/B/E/S.
We expect the 'not so bad' second-quarter results that Lowe's reported today to alleviate growing market concerns of a significant deterioration in trends at the chain over the past few months, Oppenheimer analyst Brian Nagel said.
Lowe's forecast current-quarter profit of 28 cents to 32 cents a share, while analysts were expecting 31 cents. The company said it expected a sales increase of 3 percent to 5 percent for the period.
Sales at Lowe's lost some momentum during the second quarter due to the expiration of a U.S. homebuyer tax credit and cash for appliances programs. Both had helped results significantly in the first quarter.
Sales rose 3.8 percent to $14.36 billion, but missed Wall Street's average estimate of $14.52 billion. Sales at stores open at least a year rose 1.6 percent.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)