Lowe's Lowers Guidance

The nation's second largest home improvement chain behind Home Depot said it earned $841 million, or $1.06 a share, during the quarter ending May 5. That was an increase from $586 million, or 73 cents a share, earned a year earlier. Sales were helped by increased demand in Florida and the Gulf Coast areas, which have been hard-hit by hurricanes, the company said.

For the first quarter, total sales at Lowe's stores rose 20% to $11.9 billion thanks to a gain in market share in appliances and outdoor equipment, which was aided by the addition of John Deere lawnmowers. Purchases of appliances and lawn tractors also increased sales 5.7% at stores open at least a year. Other performing categories included building materials, paint and flooring. The company said an additional week of spring merchandising sales during the first quarter helped sales but would impact the second and fourth quarters.

Second quarter forecasts took a hit, however, when Lowe's revised sales forecast to 12% from an earlier range of 13% to 14%, saying rising gas prices and changes in consumer buying habits prompted the revision. Same store sales were forecast at between 4% and 5%, down 1% from earlier estimates.

"We're expecting a good second quarter and a good balance of the year, yet maybe at a slightly lower run rate than what we saw last year, what we anticipated going into the first quarter," Chairman Robert Niblock said in a conference call with investors and analysts.The Mooresville, NC retailer, which has about 1,250 stores, said it expects a full-year profit of $4.14 to $4.22 a share, up from a February forecast of $4.03 to $4.13. The company said it also plans to open between six and 10 stores in Canada during 2006 and will begin looking at other international markets. Plans also call for an $800 million investment into its existing locations for updates and repairs, the company said.