Lowe’s sees earnings drop on rough housing market
Lowe’s saw earnings drop on a rough housing market, with comparable-store sales taking a hit -- although the company’s CEO said he believes impending federal stimulus initiatives could help jumpstart sales in the coming months.
Earnings fell 33.4 percent to $408 million in the quarter, from $613 million last year. Sales were down 0.3 percent to $10.38 billion compared with $10.4 billion last year.
For the full year, earnings were down 9.5 percent to $2.81 billion compared with $3.1 billion last year. But for the year, sales rose 2.9 percent to $48.3 billion from $46.93 billion in 2006.
Comparable-store sales dropped 7.6 percent in the fourth quarter; while for the full year, comparable-store sales were down 5.1 percent from last year.
In a statement, Lowe’s president and CEO Robert Niblock said the fourth quarter fell short of the company’s financial plans, as “we faced an unprecedented decline in housing turnover, falling home prices in many areas and turbulent mortgage markets that impacted both sentiment related to home improvement purchases as well as consumers' access to capital."
Niblock went on to say the retailer expected further turbulence in 2008 and predicted sales would remain soft.
“We remain focused on what we can control,” he said, namely customer service initiatives and managing expenses. He also credited interest rate cuts and an impending economic stimulus initiative by the federal government for helping improve the home improvement retail outlook.
“As a result [of those initiatives] many of the headwinds facing the housing market and the home improvement industry should lessen, and consumers' confidence in investing in and improving their homes should improve,” he predicted.
During the quarter, Lowe's opened 72 new stores, including two relocations. As of Feb. 1, the retailer operated 1,534 stores in the United States and Canada.