Home improvement chain Lowe's boosts income by 26% in 3rd quarter
Strong housing market helps earnings of retailer that owns stores in Canada, U.S., Mexico
Lowe's third-quarter net income increased 26 per cent, as the home-improvement retailer was bolstered by the housing market's ongoing recovery.
Its earnings were a penny per share short of Wall Street expectations, but revenue beat forecasts.
The Mooresville, N.C., company, which owns close to 2,000 stores in the U.S., Canada and Mexico, boosted its fiscal 2013 outlook again on Wednesday, but the earnings forecast was still below expectations.
Lowe's shares dropped almost three per cent in pre-market trading.
Home improvement companies have been benefiting from record-low interest rates and rising home prices, spurring customers to spend more to renovate their homes.
"The home improvement industry is poised for persisting growth in the fourth quarter and further acceleration in 2014," said CEO Robert Niblock.
Still behind Home Depot
But Lowe's has not been benefiting as much as its larger rival, Home Depot, which reported third-quarter results Wednesday that topped analysts' estimates and it lifted its outlook.
To boost results, the company has adjusted its pricing strategy, returning to offering what it says are permanent low prices on many items, instead of fleeting discounts.
The company also recently acquired Orchard Supply Hardware Stores for $205 million US, a deal that was completed during the quarter, in order to expand in California.
Lowe's Cos. earned $499 million, or 47 cents per share, for the period ended Nov. 1. That's up from $396 million, or 35 cents per share, a year ago. Analysts polled by FactSet expected earnings of 48 cents per share.
Revenue rose seven per cent to $12.96 billion from $12.07 billion. Wall Street forecast $12.73 billion in revenue.
Sales at stores open at least a year, a key retail metric, rose 6.2 per cent
Lowe's now expects full-year earnings of about $2.15 per share, up from prior guidance of $2.10 per share. Revenue is predicted to climb approximately six per cent, from an earlier estimate of five per cent. Based on 2012's revenue of $50.52 billion, the new forecast implies approximately $53.53 billion.
Analysts predict fiscal 2013 earnings of $2.20 per share on revenue of $53.09 billion.
Its shares fell $1.42, or 2.8 per cent, to $49.02 in pre-market trading about 45 minutes ahead of the market opening. Lowe's had 1,831 stores at the end of the third quarter.