Soft flooring, home decor strong in 2Q at Lowe's 2Q

Plans 40 to 45 new stores

Cecile Corral -- Home Textiles Today, 8/16/2010 2:18:02 PM

Mooresville, NC - The soft flooring and home décor categories contributed to the gains - albeit modest - in sales and comps at home improvement chain Lowe's Companies Inc. during the second quarter.

Larry Stone, president and coo, said soft flooring, especially carpet, "has been very strong for us." He warned, however, that the recent strides are still not up to par with pre-recession periods.

"We are seeing a good lift, but not as big a ticket we would have seen four or five years ago," Stone continued. "Our fashion businesses and home décor are still really good, albeit the big ticket [issues also experienced in flooring]."

The highlight for Lowe's during its second quarter, ended July 30, was its net earnings result, which rose by 9.6% to $832 million from the same period a year ago. Diluted earnings per share increased 13.7% to $0.58 from $0.51 in the 2009 second quarter.

Sales for the quarter increased 3.7% to $14.4 billion, up from $13.8 billion a year ago and comparable store sales increased 1.6%.
Year to date, sales increased 4.2% to $26.7 billion and comps grew by 2.0%. Net earnings increased 7.0% to $1.32 billion, while diluted earnings per share increased 9.5% to $0.92.

"Despite economic uncertainty, our continued focus on the customer and prudent expense management yielded solid results for the quarter," said Robert Niblock, chairman and ceo. "With limited visibility into near-term demand, we continue to focus on operational efficiency to create value for our shareholders. Longer-term, we believe improvements in labor and housing markets will be necessary to support more consistent improvement in demand for home improvement products."

The 1,724-unit chain's third quarter outlook calls for: about 12 new stores, reflecting square footage growth of approximately 2%; total sales to increase 3% to 5%; comparable store sales to increase 1% to 3%; earnings before interest and taxes as a percentage of sales (operating margin) to increase approximately 120 basis points; depreciation expense to be approximately $400 million; and diluted earnings per share of $0.28 to $0.32.

The outlook for the full year, 2010, calls for: approximately 40 to 45 new stores, reflecting total square footage growth of about 2%; total sales to increase approximately 4%; comps to increase approximately 2%; earnings before interest and taxes as a percentage of sales (operating margin) to increase about 70 basis points; depreciation expense to be about $1.60 billion; and diluted earnings per share of $1.38 to $1.45.