Lowe's posts sharp drop in profit
A customer carries a basket while shopping at a Lowe's store in Burbank, California May 19, 2008.
Credit: Reuters/Fred Prouser
ATLANTA (Reuters) - Lowe's Cos (LOW.N) reported a sharp drop in quarterly profit on Friday as it marked down prices to lure consumers in the recession and it gave profit forecasts that fell short of Wall Street estimates.
The second largest home improvement retailer, whose shares fell 5 percent in premarket trading, said earnings fell 60 percent to $162 million, or 11 cents a share, for the fourth quarter ended January 30, compared with $408 million, or 28 cents a share, a year earlier.
Analysts expected profit of 12 cents a share, according to Reuters Estimates.
Sales fell 3.8 percent to $9.98 billion. Sales at stores open at least a year fell 9.9 percent.
Gross margin contracted to 33.7 percent from 34.9 percent a year earlier, hurt by the price cuts on seasonal merchandise. Lowe's expects pressure on gross margin to ease during the first quarter.
Lowe's and industry leader Home Depot Inc (HD.N) have cut store openings as the U.S. housing slump and tight credit markets curtailed demand for big-ticket home improvement projects.
The fourth quarter marked the sixth-straight quarterly profit fall for Lowe's, and Home Depot is expected to report its 10th-consecutive decline in quarterly earnings on Tuesday.
Lowe's forecast profit of 23 cents to 27 cents a share for the first quarter and $1.04 to $1.20 for the full year.
Analysts expected profit of 32 cents for the first quarter and $1.27 for the full year.
Lowe's shares were down more than 5 percent to $16.10 in premarket trade.
(Reporting by Karen Jacobs; Editing by Derek Caney)
