Lowe's warns profit could trail forecast

ATLANTA (Reuters) - Retailer Lowe's Cos Inc (LOW.N: Quote, Profile, Research, Stock Buzz) warned on Monday that full-year profit could trail its prior forecast, saying dry conditions in some parts of the United States were hurting sales.

The company's shares fell more than 5 percent in extended trading.

Lowe's, which is holding its analyst meeting on Tuesday, said "current sales are trending below" expectations as drought conditions in the mid-Atlantic, Southeastern and Western parts of the United States hurt sales of outdoor products such as mowers and patio furniture.

"Lowe's sales trends have reversed the apparent improvement seen" in the second quarter, Sanford Bernstein analyst Colin McGranahan said in a research note.

"While part of the weakness is weather related, Lowe's cautious outlook on 2008 suggests underlying trends are weaker than the company expected against easy compares," McGranahan said, adding the forecast would likely pressure the stock.

Lowe's, the second-largest home improvement chain behind Home Depot Inc (HD.N: Quote, Profile, Research, Stock Buzz), said it now expects profit for the year ending in February to be at the low end or below a forecast of $1.97 to $2.01 a share it gave in August.

Analysts currently expect profit of $1.99 a share for the current year, flat with earnings of $1.99 a share the year before, according to Reuters Estimates.

For the third quarter that ends November 2, analysts expect profit of 45 cents a share on sales of $12.04 billion.

Problems in the subprime-mortgage sector that caters to borrowers with spotty credit have further slowed the U.S. housing market. Lower home sales and less construction have hurt results at Lowe's and Home Depot over the past year.