* Cuts sales growth forecast to 4.5 pct from 5 pct
* 2nd-qtr revenue rises 5.6 pct to $16.59 bln
* Expects spending on home-improvement to grow in second
(Adds details from conference call, CEO interview; updates
By Sruthi Ramakrishnan
Aug 20 Lowe's Cos Inc, the No. 2 U.S.
home improvement products retailer, echoed larger rival Home
Depot Inc in anticipating higher spending on renovations
in the second half of the year as the U.S. housing market showed
signs of a recovery.
Lowe's said it expects higher demand for products such as
electronic appliances, fashion fixtures and flooring as people
spruce up their homes ahead of the holidays.
"Consumers are indicating stronger intentions to complete a
home-improvement project, with most of them planning a specific
project in the next three months," Lowe's Chief Executive Robert
Niblock said on a conference call with analysts.
Home Depot on Tuesday maintained its full-year sales growth
forecast of about 4.8 percent, but said it expected same-store
sales to grow faster in the second half as customers renovate
homes with big-ticket purchases.
U.S. housing starts rebounded strongly in July, Commerce
Department data showed on Tuesday, signaling that the housing
market is regaining its footing after being hurt by last year's
run-up in interest rates.
Lowe's, however, on Wednesday cut its sales growth forecast
to about 4.5 percent from about 5 percent for the year ending
January, unable to make up for the sales missed during the
prolonged North American winter.
"... First and second quarter together, we are still
slightly short of where we'd anticipated being this time of the
year," Niblock told Reuters.
Lowe's also lowered its same-store sales growth forecast for
the year by half a percentage point to about 3.5 percent.
"It was quite evident after the first quarter that the
guidance was hopelessly optimistic," Rahul Sharma, managing
director at Neev Capital, told Reuters. "They assumed too much
Sharma said wage inflation among the more skilled job
categories and the "general wealth effect" on those invested in
equities and similar products were making the higher-income
consumer a spending "sweet spot."
But lower and middle-income consumers are reining in
spending on food and other essentials, forcing Wal-Mart Stores
Inc and dollar stores to discount more.
BETTER-THAN-EXPECTED SECOND QUARTER
Lowe's maintained its full-year profit forecast of about
$2.63 per share.
The company said it recovered "most of the outdoor product
sales" it had missed due to a severe winter but said sales of
discretionary interior products, such as window air
conditioners, were fewer than expected in the second quarter due
to a cooler summer.
Lowe's same-store sales rose 4.4 percent in the second
quarter. Analysts polled by Consensus Metrix had expected a rise
of 4.1 percent.
Net income rose 10.5 percent to $1.04 billion, or $1.04 per
share, in the quarter ended Aug. 1. Revenue rose 5.6 percent to
Analysts on average had expected earnings of $1.02 per share
on revenue of $16.55 billion, according to Thomson Reuters
Lowe's shares were nearly flat at $51.70 on the New York
Stock Exchange after falling as much as 3.5 percent in early
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Don