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Sales Jump Increases Profit for Lowe's

August 19, 2003|From Bloomberg News

Lowe's Cos., the world's No. 2 home-improvement chain, on Monday said that second-quarter profit climbed 28%, more than expected, after better weather in the Northeast spurred a jump in sales.

Net income rose to $597 million, or 75 cents a share, as revenue increased 17% to $8.77 billion, according to the retailer, based in Wilkesboro, N.C. Sales at stores open at least a year climbed 6.9%, more than the company's forecast for a gain of as much as 4%.

Lowe's older stores in New York and New Jersey had a more than 10% surge in sales, as consumers bought more gardening products and outdoor power equipment after snowstorms hurt first-quarter revenue. Chief Executive Robert Tillman also increased sales of higher-price products such as Maytag washers and dryers with zero-interest loans and free-delivery offers.

"Lowe's is firing on all cylinders," said Crit Thomas, a money manager with National City's Armada Funds, which oversees about $16 billion and owns 1.4 million shares of Lowe's. "There was pent-up demand among consumers who had delayed spending because of the weather."

The company raised its annual earnings forecast to as much as $2.27 a share, 7 cents more than its May estimate. Sales at older stores are expected to rise as much as 5%, or 1 percentage point higher than its outlook for the year.

Lowe's had been expected to earn 69 cents on sales of $8.51 billion in the second quarter, according to analysts surveyed by Thomson First Call. Net income was $467 million, or 59 cents, on sales of $7.49 billion a year earlier.

Shares of Lowe's rose $3.06 to $51.96 on the New York Stock Exchange on Monday. They touched $52.36, an all-time high. Home Depot, which reports its quarterly earnings today, rose 36 cents to $33.90. Lowe's had gained 30% this year, compared with Home Depot's 40%.

Sales growth had stalled to 0.1% at Lowe's older stores in the first quarter, the smallest gain in almost two years.

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