CHICAGO (AP) – Lowe’s Cos. Inc. said Monday that its fiscal first-quarter profit fell 22 percent but still managed to top Wall Street’s expectations as it cut prices on fewer items.The news, along with a better-than-expected second-quarter outlook and an increased full-year outlook, sent the company’s shares higher in morning trading.
The nation’s second-biggest home-improvement chain said consumers continued to stay away from bigger-ticket housing items as they tried to shore up their savings amid the recession. But shoppers did welcome spring with smaller, outdoor purchases.
And Lowe’s remains optimistic that economic conditions may be getting better.
“In recent weeks we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets, and home prices slow their decline,” Chairman and Chief Executive Robert Niblock said in a statement.
Lowe’s, like much of the rest of the housing and home improvement industry, has been battered by falling housing prices, rising foreclosures and unemployment rates and worsening consumer confidence.
Niblock told The Associated Press in an interview that sales in the hardest-hit states – among them California, Nevada and Florida – were still faring poorly but were beginning to show signs of improvements as more foreclosed properties are purchased.
Meanwhile, areas of the Ohio Valley and Texas continued to show positive sales growth.
“It’s moving in the right direction,” he said. “Overall, most areas you saw signs of improvement coming off the fourth quarter.”
Lowe’s will monitor its expenses and will “continue to plan conservatively” because many of factors affecting the housing market are still at or near historic lows.
For the period that ended May 1, Lowe’s profit dropped to $476 million, or 32 cents per share. That’s down from $607 million, or 41 cents per share, a year ago.
Analysts predicted net income of 25 cents per share, according to a Thomson Reuters poll. Those estimates normally exclude one-time items.