Lowe's Cos., the second-largest U.S. home-improvement retailer, posted second-quarter profit that topped analysts' estimates and raised its forecast for the year as the housing recovery fuels spending on remodeling.
Net income in the quarter ended Aug. 2 increased 26 percent to $941 million, or 88 cents a share, from $747 million, or 64 cents, a year earlier, the Mooresville, N.C.-based retailer said Wednesday in a statement. Analysts projected 79 cents, the average of 25 estimates in a Bloomberg survey.
Chief Executive Officer Robert Niblock added employees during Lowe's busiest store hours to help shoppers, reduced the number of slow-selling items and negotiated lower prices with vendors after growth trailed larger Home Depot Inc. Sales at stores open at least a year climbed 9.6 percent, spurred by more transactions and higher spending.
"Lowe's is making steady progress with its turnaround," Christopher Horvers, an analyst at JPMorgan Chase & Co. in New York, wrote in a note Aug. 8. He upgraded the shares to overweight, the equivalent of a buy rating.
Rising home prices are boosting demand for appliances and other big-ticket items that consumers were reluctant to buy in the housing downturn, Niblock told
analysts on a conference call. He said higher interest rates may temper the pace of home renovation spending in the second half of the year.
Lowe's acquisition of 72 Orchard Supply Hardware Stores Corp. stores will boost sales in California, Niblock said. The company said yesterday it expects to complete its $205 million purchase by the end of August after the U.S. Bankruptcy Court for the District of Delaware approved the asset sale.
Profit in the year ending Jan. 31 will be about $2.10 a share, Lowe's said. That's up from a previous estimate of $2.05 and matches analysts' average projection.
Revenue rose 10 percent to $15.7 billion in the second quarter. Analysts estimated $15.1 billion, on average. Sales at stores open at least 12 months rose 9.6 percent, the largest gain since the first quarter of 2004.
Revenue this year will rise 5 percent, more than a previous forecast for a 4 percent gain, Lowe's said today. Same-store sales will increase 4.5 percent, compared with an earlier projection of a 3.5 percent increase, the company said.