Lowe’s quarter profit beats forecasts

A customer pushes a shopping cart outside a Lowe’s store in East Peoria, Ill., on Wednesday. Lowe’s reported a fourth-quarter profi t Monday that beat analysts’ estimates.
A customer pushes a shopping cart outside a Lowe’s store in East Peoria, Ill., on Wednesday. Lowe’s reported a fourth-quarter profi t Monday that beat analysts’ estimates.

— Lowe’s Cos., the second largest U.S. home-improvement retailer, posted a fourth quarter profit Monday that exceeded analysts’ estimates, helped by spending on remodeling and superstorm Sandy repairs.

Net income fell 11 percent to $288 million, or 26 cents a share, from $322 million, or 26 cents, a year earlier, the Mooresville, N.C.-based company said Monday in a statement. Analysts projected 23 cents, the average of 24 estimates in a Bloomberg survey.

Sales at stores open at least a year increased 1.9 percent as builders started single-family housing at the fastest rate in four years and homeowners in the Northeast made repairs after superstorm Sandy. The company also has been revamping its merchandising strategy to give prominence to faster-selling items, such as cleaning supplies.

“They are getting some help from these initiatives,” said John Tomlinson, an analyst at ITG Investment Research in New York. His firm doesn’t rate shares.

Profit this year will be about $2.05 a share, Lowe’s said. Analysts’ estimated $2.10, on average.

Spending on store improvements and hiring will weigh on profitability in 2013, Chief Financial Officer Robert Hull told analysts Monday on a conference call.

Lowe’s shares slipped $1.76, or 4.8 percent, to close Monday at $35.86 in New York. The shares rose 6.1 percent this year through Friday compared with a 6.3 percent gain for the Standard & Poor’s 500 Index.

Lowe’s also said Monday that it authorized a new $5billion share buyback program that it expects to use in the next two years.

Homeowners are spending more as the value of their property increases. The median price of an existing home rose to $173,600 in January, up 12.3 percent from a year earlier, according to a report last week by the National Association of Realtors in Washington. It was the biggest advance in property values since November 2005 as improving home sales combined with dwindling inventory.

In another favorable housing report from January, builders broke ground on 613,000 single-family houses at an annualized rate, the most since July 2008 and up 0.8 percent from December, Commerce Department figures showed last week in Washington.

A payroll-tax break that expired Dec. 31 is causing Americans to pay 2 percentage points more to Social Security, slowing consumer spending. Wal-Mart Stores Inc. last week forecast first quarter profit that trailed analysts’ estimates because of the increase and delayed tax returns.

Business, Pages 28 on 02/26/2013

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