Lowe's Rebound Safe at Home

Yet, "following a solid start to the quarter, sales weakened in June as several factors, including adverse weather in many parts of the country, impacted consumers' ability to initiate typical late spring and early summer projects," the company said in a release.

Lowe's speculated on the conference call that shoppers took vacations during the period, contributing to the sales slowdown. "It was kind of an anomaly there for a three-week period ... [There was] nothing that we really did dramatically different in the business that started the reacceleration," the company said.

While Lowe's said sales rebounded in July, same-store sales only rose 3.6% in the month, the same as June's increase. That compared with a 12.5% rise in July 2003, making two-year same-store sales growth roughly 16%.

The number of single-customer purchases that came to more than $1,000 rose 40% in the latest quarter. The company believes higher gas prices affected customer shopping habits, leading them to combine trips.

For the current third quarter, Lowe's expects to earn 65 cents to 66 cents on sales that are up 15% from the year-ago quarter's $7.92 billion, or about $9.11 billion. Analysts were forecasting earnings of 64 cents a share on sales of $8.97 billion.

Same-store sales in the third quarter are seen up 3% to 4%. For the first 16 days of the quarter, same-store sales have exceeded the top end of this range, the company said. Lowe's noted that it had double-digit same-store sales in all 13 weeks of the third quarter last year but said it still feels confident in its ability to deliver the specified guidance.

For all of fiscal 2004, Lowe's expects to earn $2.69 to $2.71 a share on sales that are up 18% from the prior year's $30.8 billion, or $36.3 billion. Same-store sales are forecast up 6%.

Analysts had been forecasting earnings of $2.71 a share on sales of $36.3 billion.

Meanwhile, rival Home Depot(HD Quote), which reports earnings Tuesday, was up $1.12, or 3.4%, to $34.26. Analysts are calling for a profit of 64 cents a share, which would be up from 54 cents a share in the year earlier.