May 16 (Bloomberg) -- Lowe’s Cos., the second-largest U.S. home improvement retailer, reported first-quarter profit that trailed analysts’ estimates and lowered its 2011 profit forecast after customers cut back on renovations.
Earnings were unchanged at 34 cents a share, Mooresville, North Carolina-based Lowe’s said today in a statement, missing the average of 36 cents projected by analysts in a Bloomberg survey. Lowe’s trimmed its profit forecast for the year ending Feb. 3, 2012, to a maximum of $1.64.
Economic pressures and bad weather trimmed sales and reduced the number of visits to Lowe’s older stores by 3.4 percent, Chief Executive Officer Robert Niblock said today on a conference call. Tumbling home prices and higher fuel bills deterred homeowners from undertaking major projects on their houses.
“Consumers remain cautious when it comes to big ticket, discretionary spending on their homes,” Niblock told analysts on the call. Rising fuel and energy costs are the biggest deterrent to future spending, he said.
A first-quarter survey of customers found that 84 percent of spending planned in the next six months will focus on “small-ticket” projects costing less than $500, said Niblock, 48.
Net income fell 5.7 percent to $461 million from $489 million a year earlier. Sales dropped 1.6 percent to $12.2 billion, also hurt by the absence of tax credits and government rebates on purchases of energy-efficient appliances that boosted revenue in 2010.
Sales at stores open at least 13 months declined 3.3 percent, more than the median forecast of a 1 percent drop by Janney Capital Markets, Sanford C. Bernstein & Co. and Piper Jaffray & Co.
“A tough economy continues to keep sales trends in check,” David Strasser, an analyst at Janney in New York, said today in a note to clients. He rates Lowe’s “neutral.”
Home prices fell in more than three-fourths of U.S. cities in the first quarter, hurt by foreclosures selling at cut-rate prices, the National Association of Realtors said May 10.
Lowe’s fell 92 cents, or 3.6 percent, to $24.84 at 4:01 p.m. on the New York Stock Exchange. The shares have slipped almost 1 percent this year.
The company projected annual profit of $1.56 to $1.64 a share and estimated sales will rise about 4 percent in the year ending Feb. 3. In February, it projected earnings of $1.60 to $1.72 on revenue growth of about 5 percent.
Home Depot Inc., the largest U.S. home-improvement retailer, reports first-quarter earnings tomorrow.
Sales of lawn and garden items were hurt by bad weather in April, according to a May 11 report by Colin McGranahan, an analyst at Sanford C. Bernstein in New York who rates the shares as “market perform.”
Heavy rain and severe conditions, including reports of 875 tornadoes, characterized April’s weather, according to the National Oceanic and Atmospheric Administration’s National Climatic Data Center in Asheville, North Carolina. It was the 10th wettest April since 1895.
Economic growth slowed to a 1.8 percent annual rate in the first quarter after expanding at a 3.1 percent pace in the last three months of 2010, according to Commerce Department figures. Rising fuel and grocery bills are damping consumer confidence and squeezing the budgets of households, whose spending makes up 70 percent of the world’s largest economy.
(Lowe’s held a conference call for analysts at 9 a.m. New York time. Click LOW US <Equity> EVT <GO>.
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