* Q4 EPS 11 cents vs. estimate 12 cents
* Outlook for year below Wall Street estimates
* Store openings cut for '09
* Shares down 3 pct
(Adds stock action, company and analyst comment, byline)
By Karen Jacobs
ATLANTA, Feb 20 Lowe's Cos (LOW.N) reported a
sharp drop in quarterly profit on Friday as it marked down
prices in the recession and it gave profit forecasts that fell
short of Wall Street estimates, sending shares down 3 percent.
The second-largest home improvement retailer also cut its
planned store openings for 2009.
"The (U.S.) stimulus efforts will provide some support to
the consumer, but today the macro environment shows few
positive signs and therefore we continue to plan
conservatively," Lowe's Chairman Robert Niblock said during a
Earnings fell 60 percent to $162 million, or 11 cents a
share, for the fourth quarter ended Jan. 30, compared with $408
million, or 28 cents a share, a year earlier.
Analysts expected profit of 12 cents a share, according to
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, but still expects margin to be down for that
"We think the report reflects the challenge Lowe's faces in
continuing to reduce inventory and expenses in line with its
third year of declining sales," Sanford Bernstein analyst Colin
McGranahan said in a research note.
He added that "the company's already lean operating
structure will likely limit the extent of expense reductions
possible, thereby continuing to put pressure on operating
CURBING STORE GROWTH
Lowe's and industry leader Home Depot Inc (HD.N) have
curbed store expansions as the U.S. housing slump and tight
credit markets curtailed demand for big-ticket home improvement
On Friday, Lowe's said it now plans to open 60 to 70 total
stores this year, down from 75 to 85 stores it originally
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 a share 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 63 cents, or 3.7 percent, to $16.35
in morning New York Stock Exchange trading, while Home Depot
was down 24 cents, or 1.2 percent, to $19.92.
(Reporting by Karen Jacobs; Editing by Derek Caney)