Lowe’s Sales, Earnings, Forecast Fall (LOW, HD)

Lowe’s Companies Inc. (NYSE: LOW) reported second-quarter earnings per share (EPS) of $0.64 and $14.25 billion in sales before markets opened this morning. In the same period a year ago, the home improvement retailer reported EPS of $0.68 on revenue of $14.54 billion. Second-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.70 and $14.46 billion in revenue.

The company’s chairman/president/CEO said:

Our results fell short of our overall expectations. However, I have confidence in our strategy and in our employees, and while we recognize the significant magnitude of change that we’ve asked the organization to absorb as we transform our business, we fully understand that we must improve our level of execution.

In its outlook statement, Lowe’s said it expects sales for the fiscal year ending in January 2013 to be flat with the previous year and the diluted EPS is expected to total $1.64. Last year the company reported sales of $50.21 billion and EPS of $1.66. The consensus estimate for this year had called for EPS of $1.80 on sales of $50.57.

Same-store sales fell 0.4%, and U.S. same-store sales fell 0.2%. Lowe’s also took a pretax charge amounting to $0.01 per share for restructuring the company’s U.S. headquarters.

Compared with last week’s quarterly report from The Home Depot Inc. (NYSE: HD), Lowe’s had a dismal quarter. At Home Depot, earnings and sales rose and the company boosted its forecast. Lowe’s has been preoccupied lately with its hostile takeover bid for Canada’s Rona Inc. in a battle that the provincial government has now entered, saying that Rona is a strategic asset and promising to help the Canadian firm beat back Lowe’s offer. For all the CEO’s fine words about improving the company’s execution, he probably has got other things on his mind.

Lowe’s shares are down more than 9% in premarket trading at $25.25. The current 52-week range is $18.28 to $32.29. Thomson Reuters had a consensus analyst price target of $30.82 before today’s results were announced.

Paul Ausick