Lowe's Cos Inc , the No. 2 U.S. home improvement chain, gave a muted quarterly outlook despite posting stronger-than-expected results for its spring quarter.

The company, whose shares fell more than 2 percent, forecast earnings of 57 cents to 59 cents a share for the second quarter, which began on May 1. Analysts on average were expecting 62 cents, according to Thomson Reuters I/B/E/S.

While we are optimistic we will experience solid demand through the balance of the year, we view 2010 as a year of transition for our industry, Chief Executive Officer Robert Niblock said in a statement.

In its seasonally strong first quarter, Lowe's saw strong demand for products like fertilizer, potting soil and tools as many Americans prepared to spruce up lawns and gardens.

Also, many U.S. homeowners who had put off home renovations in the economic downturn upgraded appliances to take advantage of a federal stimulus for energy-efficient goods and invested in homes they are likely to live in for a longer period of time.

Consumers are showing signs of reengagement in home improvement, including discretionary projects and purchases of bigger ticket products, which had taken a back seat during the worst of the economic downturn, Niblock said.

Lowe's, which ranks behind industry leader Home Depot Inc , said net income rose to $489 million, or 34 cents a share, in the first quarter ended April 30 from $476 million, or 32 cents a share, a year earlier.

Analysts on average were expecting a profit of 31 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 4.7 percent to $12.39 billion, beating the average estimate of about $12.25 billion. Sales at stores open at least a year rose 2.4 percent.

Shares of Lowe's were down 2.4 percent at $25.44 in trading before the market opened.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn )