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Lowe's boosts forecast
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February 26, 2001: 10:51 a.m. ET
Home improvement retailer sees better-than-expected 1Q, 2Q, full year
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NEW YORK (CNNfn) - Lowe's Companies Inc., the nation's second-largest home improvement retailer, predicted Monday that profit for its fiscal first and second quarters as well as all of the current year will be higher than expected.
The company also reported that fourth-quarter earnings fell about 5 percent below year-earlier levels, due mainly to deflated lumber and building materials prices and a slowing U.S. economy.
The upbeat forecast comes amid a general economic slowdown, shaky consumer confidence and softer retail sales that have caused many of the nation's biggest chains to report lackluster fourth-quarter results.
It stands in contrast with its chief competitor, Home Depot Inc. (HD: Research, Estimates), which also is struggling with deflated lumber prices and homeowners' easing back on major projects.
Lowe's shares jumped $4.76 to $59.34 in Monday afternoon trading. Home Depot shares gained $3.21 to $43.22.
For the first quarter ending May 4, Lowe's expects earn 56 cents to 58 cents a diluted share, well above the current analyst consensus forecast of 49 cents a share, according to First Call.
The company also forecast earnings for the second quarter, ending around Aug. 1, to be about 81-83 cents a share, ahead of forecasts of 79 cents a share.
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For the full fiscal year, Lowe's also predicted $2.45 to $2.50 a share compared with estimates of $2.40 a share, according to First Call. The company plans to open 115-120 new stores during the year, many in the New York and Boston markets, further expanding its retail base nationwide, the company said.
 For the fourth-quarter of the year ended Feb. 2, Wilkesboro, N.C.-based Lowe's (LOW: Research, Estimates) reported net earnings of $140.8 million, or 37 cents a share, below the $149 million, or 39 cents a share, a year earlier.
Sales increased 20 percent to $4.5 billion, though sales at stores open at least a year decreased 3 percent.
For the fiscal year, Lowe's earned $810 million, or $2.11 a share, up from $673 million, or $1.75 a share. Full-year sales increased 18 percent to $18.8 billion, with comparable-store sales rising 1.2 percent.
During a conference call with analysts Monday, Lowe's CEO Robert Tillman attributed the optimistic forecast mainly to strict cost-cutting measures that include striking agreements with vendors to return slow-moving inventory and bringing all its distribution and logistics operations together in one division.
The company also expects higher gross margins as it increases its offering of refrigerators, washers, dryers and other appliances in the wake of Circuit City's exit from that field.
A focus on commercial and special-order customers also will cushion the company in a volatile market, Tillman said.
"We're a bigger, better, stronger and more balanced company than at any time in our 55-year history," Tillman said. 
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