The company, which opened 49 stores in the third quarter, earned $716 million, or 46 cents a share in the three months ended Nov. 3, reflecting an increase from the $646 million, or 40 cents a share, earned in the same period a year earlier. Revenues for the quarter were up 5.8% to $11.2 billion but sales at stores open at least a year fell 4%, the company said.

"The combined effects of a slowing housing market in parts of the US, significant deflation in certain commodity categories, and a difficult comparison to last year's hurricane recovery and rebuilding efforts have created a challenging sales environment for home improvement," Robert A. Niblock, Lowe's chairman, president and CEO, says.

The company, which operates 1,330 stores in 49 states, also cut its forecast for the fourth quarter and full year, saying it expected the soft housing and home improvement market would continue into 2007. The Mooresville, NC firm said it expects a 4% to 6% drop in same-store sales for the fourth quarter and an overall profit for the quarter of between 36 cents and 38 cents a share. Company executives say they anticipate a full-year profit of $1.95 to $1.97 per share, below the $2 to $2.07 a share it predicted in September. Analysts had expected a profit of 41 cents a share in the fourth quarter and $1.97 a share for the year.

Last year's strong housing growth and the demand for building materials following two devastating hurricanes along the Gulf Coast benefited home improvement chains, including Lowe's larger rival, Home Depot, but both now face lower than expected results as the housing market cools.