WILKESBORO, N.C. – Lowe's Cos. Inc., the world's No. 2 home-improvement retailer, on Monday said its first-quarter net earnings rose 20 percent, outpacing analysts' estimates despite a slowing economy.
The Wilkesboro-based company posted net income of 58 cents a diluted share, topping analysts' estimates of 51 to 57 cents as compiled by Thomson Financial/First Call. The results were at the high end of the company's own forecast.
"Lowe's successfully focused on the fundamentals during the quarter to produce earnings per share results at the high end of our guidance," Lowe's Chairman Robert Tillman said in the earnings announcement
Net earnings for the quarter ended May 4 rose to $225.3 million from $187.1 million a year earlier, and sales were up 18.1 percent to $5.28 billion from $4.47 billion.
Lowe's, which earned 49 cents per diluted share in the first quarter last year, released its earnings before the opening bell on Wall Street. Its shares on Friday closed up 70 cents at $68.40 on the New York Stock Exchange.
Lowe's first-quarter sales at stores open at least a year — "comparable-store sales," a key industry barometer — fell 3 percent, due in part to deflation in lumber and building materials prices, the company said.
Reflecting "cautious optimism" that the economy will strengthen in the second half of the year, Lowe's forecast ''flattish'' comparable-store sales in the second quarter, and a 2 percent increase for the full year.
"The recent activity by the Federal Reserve suggests its continued willingness to stimulate the economy," Tillman said. "We expect the five interest rate cuts since the beginning of the year to begin to positively influence consumer spending in the coming months."
Lowe's rival Home Depot Inc., the world's largest home-improvement retailer, last week posted a modest 0.5 percent increase in first-quarter net income, although per share results of 27 cents a share were at the high end of Wall Street estimates.
Over the past year, Lowe's shares have risen 31.5 percent, outpacing a 6.6 percent gain for the Standard & Poor's retail index. Home Depot shares have fallen 6 percent.
Lowe's opened a sixth regional distribution center and 37 new stores in the first quarter and now operates 680 stores with 71.9 million square feet of retail space, up nearly 23 percent in the past year.
The company expects sales in the fiscal second quarter ending August 3 to rise about 15 percent, generating diluted earnings per share of 80 to 82 cents.
On the year, the company expects to earn $2.45 to $2.48 a diluted share, in the upper end of analysts' estimates of $2.35 to $2.50. The company sees sales rising 17 to 18 percent.