Lowe’s Inc. beat expectations in the fourth quarter, but executives warned Monday that a slowing economy and tight credit could restrict the home improvement industry’s growth in 2013.
Profit at Lowe’s, the nation’s second-biggest home improvement chain, slipped more than 10 percent in the fourth quarter to $288 million, but bested analysts’ expectations. Much of the decline can be attributed to the company’s fiscal calendar: Its fourth quarter ends on the Friday nearest the end of January, meaning that the most recent quarter was a week shorter than that in 2011.
The Mooresville-based company’s results were boosted by reconstruction and repair in the Northeast after Superstorm Sandy tore through the region in October. Lowe’s also saw benefits from its ongoing product review and repricing initiative that in part focuses on everyday value and targeting displays to individual markets.
The company’s fourth quarter earnings per share of 26 cents were unchanged from a year ago. Full-year net income rose 6.5 percent to $1.9 billion.
“It’s indicative of a company that’s getting better,” analyst David Strasser of Janney Montgomery Scott said in an interview with Bloomberg.
Lowe’s earnings grew steadily through the early 2000s and peaked in the fiscal year ending in February 2007. The housing collapse sent the company’s earnings and stock price plummeting over the next two years before beginning to rebound. The company’s own improvement plan has been widely watched as Lowe’s seeks to compete against its larger rival, Home Depot, which reports earnings Tuesday.
In a projection released Monday, Lowe’s said it expects to further increase sales and net income in the current fiscal year as the housing market continues to recover. The company plans to open about 10 stores and announced it will buy back $5 billion in stock.
Stores in hard-hit areas like Florida, Arizona and Nevada are beginning to perform better, executives said.
But CEO Robert Niblock told analysts on a conference call that a projected slowing of the U.S. economy will weigh on the industry in the coming year.
Also, he said that Lowe’s has found people are putting off home improvement projects because their income hasn’t been growing, and they’re reluctant to take out loans for renovations.
Lowe’s shares fell nearly 5 percent Monday, closing at $35.86.
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