Lowe's profit falls 10 percent in third quarter

CHARLOTTE, N.C. -- Lowe's Cos., the No. 2 U.S. home improvement chain, said today its third-quarter profit fell 10.2 percent, citing a weak sales environment amid a continuing slump in the housing sector.

The company also slashed its outlook for the fourth quarter and the full year, sending its shares down more than 6 percent in morning trading.

It's been a tough quarter for home-improvement retailers. Home Depot Inc., Lowe's bigger rival, reported a 27 percent drop in third-quarter earnings last week and cut its full-year outlook, citing the persistent housing slump.

On a conference call with analysts, Chairman and CEO Robert A. Niblock blamed slowing home sales, lower home prices and tightening of credit standards, all which hurt consumer spending on big-ticket items.

"Based on our results and the significant losses and write-downs announced this quarter in the banking and mortgage industries, it's clear that the pressures on our industry and the home improvement consumer are greater than we previously anticipated and are likely to last longer than we expected," Niblock said.

Mooresville, N.C.-based Lowe's said it earned $643 million, or 43 cents a share, for the three months ended Nov. 2, down from $716 million, or 46 cents a share, a year earlier.

Revenue rose to $11.6 billion from $11.2 billion a year earlier. Same-store sales, or sales in stores open at least one year, a key measure of industry performance, fell 4.3 percent.

Deutsche Bank Securities analyst Mike Baker said in a client note "business likely has fallen off pretty dramatically since the end of September."

"Once business turns, we believe Lowe's will be an ideal stock to benefit from the recovery," Baker wrote. "But this release tells us that that is not at hand in late 2007 or early 2008."

Analysts surveyed by Thomson Financial had been looking for net income of 41 cents a share on revenue of $12.4 billion.