Lowe's issues full-year profit warning

09/25/07 - newratings.com

NEW YORK, September 25 (newratings.com) – Lowe's Companies Inc (LOW), the second-largest US home-improvement retailer, Monday warned that its full-year profits could fall short of its prior forecasts due to unfavourable weather conditions.

The Mooresville, North Carolina-based company said its earnings for the fiscal-year are likely to meet the low end of its previous guidance range of $1.97-$2.01 per share or fall marginally below the prior forecast on account of lower-than-expected sales trends. Lowe's Companies said drought conditions in the mid-Atlantic, Southeastern and Western regions of the US had hurt the sales of outdoor products, such as mowers and patio furniture. Problems in the subprime-mortgage sector that caters to borrowers with spotty credit have further weakened the US housing market. A decline in home sales and construction has been hurting results at Lowe's Companies over the past year.

The company expects earnings to rise by 12%-15% per annum and annual sales to climb 8%-11% in 2008-2010. Reuters quoted analyst Colin McGranahan of Sanford Bernstein as saying that Lowe's Companies' sales trends have reversed from the improvement witnessed in the fiscal second quarter and the company’s cautious 2008 outlook is indicative of weaker-than-expected underlying trends against easy comps.