NEW YORK - Lowe's Cos Inc posted better-than-expected quarterly profit on Monday as it saw some strength in outdoor projects during the spring, even as consumers still shunned big-ticket home renovations.
The No. 2 U.S. home improvement retailer behind Home Depot Inc also raised its full-year forecast as it saw some signs that the decline in the housing market may be ebbing and consumer confidence may be improving.
In recent weeks, we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets and home prices slow their decline, Chief Executive Robert Niblock said in a statement.
He added that though these are positive signs, many economic indicators remain near historic lows, and Lowe's will continue to be conservative with its plans.
For the full year ending January 29, Lowe's now expects to earn $1.13 per share to $1.25 per share. It had previously expected earnings of $1.04 per share to $1.20 per share.
Analysts looked for Lowe's to earn $1.11 per share.
We are in a fragile state but there are more positive things to look toward today than we had six months or even a year ago, said Jefferies & Co analyst Daniel Binder. It's still all about things being less bad.
Lowe's net profit fell to $476 million, or 32 cents a share, for the first quarter, ended May 1, from $607 million, or 41 cents a share, a year earlier.
Analysts, on average, had expected a profit of 25 cents per share, according to Reuters Estimates.
Sales fell 1.5 percent to $11.83 billion, as same-store sales fell 6.6 percent in the quarter.
Lowe's said it expects to earn 51 to 55 cents per share for the second quarter, ending July 31, on a sales decline of 2 percent to an increase of 1 percent.
Analysts expect earnings of 50 cents a share.
Lowe's also said it still expects to open 60 to 70 stores.
It also revised full-year sales plans to a range of a decline of 2 percent to an increase of 1 percent. Previously, it had expected the higher end to be an increase of 2 percent.
Same-store sales are still expected to decline 4 percent to 8 percent for the year.
Its shares traded at $20.00 in early morning trading, up from Friday's New York Stock Exchange close of $18.45, while rival Home Depot Inc's shares rose to $25.67 from Friday's close of $24.40. Home Depot is scheduled to report its results on Tuesday.
(Reporting by Aarthi Sivaraman; Editing by Gerald E. McCormick and Brian Moss)