Lowe’s (NYSE:LOW) suffered a surprise drop in first-quarter sales and downgraded its financial outlook, driving the No. 2 U.S. home improvement retailer’s stock sharply lower Monday morning.
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Mooresville, N.C.-based Lowe’s said it earned $461 million, or 34 cents a share, last quarter, compared with a profit of $489 million, or 34 cents a share, a year earlier. Analysts had been calling for stronger EPS of 36 cents.
The Home Depot (NYSE:HD) rival said its sales declined 1.6% to $12.19 billion, compared with the Street’s view for a rise to $12.52 billion. Same-store sales declined 3.3%.
“During the quarter, we faced ongoing economic pressures, unfavorable weather conditions and tough comparisons to last year’s government stimulus programs,” CEO Robert Niblock said in a statement.
The disappointing results led Lowe’s to cut its 2011 guidance. The company now sees EPS of $1.56 to $1.64 on a 4% rise in sales. Even the optimistic end of that EPS range would miss expectations for $1.70. Previously, Lowe’s forecasted EPS of $1.60 to $1.72.
For the current quarter, Lowe’s said it sees sales increasing 4%, translating to EPS of 65 cents to 69 cents, compared with consensus calls for 68 cents. Same-store sales are seen rising 2%.
“While we are focused on competing effectively in the current environment, we are also working diligently on our commitment to deliver better customer experiences,” Niblock said. “We are building momentum in 2011 behind our transformation from a home improvement retailer to a home improvement company.”
Shares of Lowe’s dropped 5.05% to $24.46 ahead of Monday’s open amid disappointment over the results and guidance. The stock had been up almost 3% on the year as of Friday.