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Lowe's Homesick Blues - Forbes.com
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document.write('</tr>'); document.write('</table>'); } //--> </script> <!DOCTYPE HTML SYSTEM "http://www.forbes.com/pushfiles/w3c/xhtml1/DTD/xhtml1-transitional.dtd"> <span xmlns:lxslt="http://xml.apache.org/xslt" class="artsectiontitle">Market Scan</span><br><span class="mainarttitle"><b>Lowe's Homesick Blues</b></span><br><a href="javascript:fdcBioWindow('andrewfarrell')">Andrew Farrell</a>, <span class="mainartdate">11.19.07, 7:25 PM ET</span><p></p> <table align="left" cellspacing="0" cellpadding="0" border="0"> <tr> <td> <script src="https://web.archive.org/web/20071217194441js_/http://images.forbes.com/boxes/low.js"></script><br> <script src="https://web.archive.org/web/20071217194441js_/http://images.forbes.com/boxes/hd.js"></script><br> <script>var fdcRelStoriesQuery = "?tickers=LOW,HD&keywords=U.S. markets,U.S. equities,Housing market,Home renovations,Retail&url=2007/11/19/lowes-home-closer-markets-equity-cx_af_1119markets38§ion=Markets";</script><span id="relstoriesbox"></span> <br> <script src="https://web.archive.org/web/20071217194441js_/http://images.forbes.com/boxes/popstories.js"></script> <br> </td><td><img height="5" width="5" src="https://web.archive.org/web/20071217194441im_/http://images.forbes.com/media/assets/spacer_white.gif"></td> </tr> <tr> <td colspan="2"><img height="5" width="5" src="https://web.archive.org/web/20071217194441im_/http://images.forbes.com/media/assets/spacer_white.gif"></td> </tr> </table> <font style="text-transform: uppercase; float: left"></font><p>The slumping housing market is pushing Americans to cut back on home renovations. That restraint is pressuring the bottom line at home improvement retailers like <b>Lowe's</b>.</p><p> <b>Lowe's</b> (nyse: <a href="https://web.archive.org/web/20071217194441/http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=LOW" class="maintkrlink">LOW</a> - <a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/markets/company_news.jhtml?ticker=LOW"> news </a> - <a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=LOW"> people </a>) said its third-quarter profits fell 10.2% to $643 million, or 43 cents per share, from $716 million, or 46 cents per share, a year ago. Analysts polled by Thomson Financial had been expecting the company to earn 41 cents per share. </p><p>Lowe's also cut its outlook. The retailer said it now expects earnings per share of 25 cents to 29 cents for the fourth quarter. Analysts had been expecting earnings per share of 36 cents. For the full year, the company expects to earn $1.83 to $1.87 per share. The company previously forecast $1.97 to $2.01 per share.</p><p>The weak earnings and guidance sent investors running from Lowe's stock. Lowe's shares fell 8.0%, or $2.01, to $23.00. </p><p>"Many external factors contributed to the weak sales environment, including a continuing housing correction, drought conditions in several U.S. markets, and slower than expected sales in Gulf Coast markets," said Lowe's Chief Executive Officer <b><a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/finance/mktguideapps/personinfo/FromPersonIdPersonTearsheet.jhtml?passedPersonId=1115049">Robert A. Niblock</a></b>. "Clearly the largest of these impacts was the unstable housing environment evidenced by an even steeper decline in housing turnover, falling home prices in many markets, and a near record inventory of homes for sale."</p><p>A glut of homes and housing demand undermined by a throttled supply of mortgages has hit housing markets sharply in many areas. Declining values and less turnover has put the breaks of home renovation which is hurting sales at Lowe's and rival home improvement retailer <b>Home Depot</b> (nyse: <a href="https://web.archive.org/web/20071217194441/http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=HD" class="maintkrlink">HD</a> - <a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/markets/company_news.jhtml?ticker=HD"> news </a> - <a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/peopletracker/results.jhtml?startRow=0&name=&ticker=HD"> people </a>). </p><p>Lowe's third-quarter sales rose 3.2% to $11.6 billion from $11.2 billion a year ago. Analysts polled by Thomson Financial expected sales of $11.8 billion.</p><p>It won't get easier any time soon. The National Association of Home Builders said Monday its housing market index, which measures homebuilders' sentiment on home sales, registered a 19 in November. The November reading matched October's revised reading. They mark the index's lowest levels since it was started in 1985.</p><p>Standard & Poor's analyst Michael Souers said he expects the housing market to remain troubled throughout 2008. However, he maintained a "buy" rating on Lowe's stock Friday because he believes it is trading at attractive levels.</p><p>Last week, Home Depot revealed its injuries from the housing slump. The retailer said its third-quarter profits slumped 26.8%, to $1.09 billion, or 60 cents per share, from $1.49 billion, or 73 cents per share, a year ago. (See: <a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/markets/2007/11/13/home-depot-update-markets-equity-cx_af_1113markets23.html">"Home Depot's Homesick Blues"</a>) </p><p> <em>The Associated Press contributed to this article.</em> </p><p> <a href="https://web.archive.org/web/20071217194441/http://www.forbes.com/markets/2007/11/13/home-depot-update-markets-equity-cx_af_1113markets23.html"></a> </p><br><br><link href="https://web.archive.org/web/20071217194441cs_/http://images.forbes.com/css/rts/rts.css" type="text/css" rel="STYLESHEET"><script type="text/javascript" src="https://web.archive.org/web/20071217194441js_/http://images.forbes.com/scripts/rts-comments/fdcrts.js"></script><br><div style="width:418px;display='block'" id="fdcrtsid"> <a href="https://web.archive.org/web/20071217194441/http://rate.forbes.com/comments/CommentServlet?op=cpage&sourcename=story&StoryURI=2007/11/19/lowes-home-closer-markets-equity-cx_af_1119markets38.html">Read All 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