(Updated with current stock prices and additional analysis of the earnings report.)
MOORESVILLE, N.C. (
) -- That much-ballyhooed housing market recovery? Apparently it isn't being felt yet at home improvement retailers, at least not at
. The company posted a 19% decline in second-quarter earnings and released a weak full-year forecast.
The news sent shares plummeting 9% to $20.75 in morning trading.
During the quarter, profit fell to $759 million, or 51 cents a share, missing analysts expectations of 54 cents. This compares with a profit of $938 million, or 64 cents, in the year-ago period.
Revenue declined 5% to $13.84 billion from $14.51 billion, while same-store sales sank 9.5%, much lower than expected.
As the housing market showed signs of hope in July, with median home prices and construction spending up and better-than-expected earnings from home builders, analysts had expected home-improvement retailers to see a small bounce back.
But Lowe's CEO Robert A. Niblock said: "Wavering consumer confidence, unseasonable weather in core markets, and restrained customer spending compared to last year's fiscal stimulus-aided results led to lower than expected sales in the second quarter."
As a result, Lowe's plans to scale back new store openings next year. Lowe's predicts it will open 35 to 45 stores and is taking a $48 million charge for canceling plans for several new stores. Wall Street was expecting at least 50 new locations next year.
"We view the company's decision to further reduce square footage growth positively," J.P. Morgan analyst Christopher Horvers wrote in a note. "We, like many others, have been critical of management's insistence on growth.... The decision to cut bait on several projects is an acknowledgement of the challenging environment that is likely to persist for some time."
While sales of big-ticket items were weak, Lowe's has seen a boost in sales of outdoor and landscaping items, as well as paint, as consumer adopt a do-it-yourself mindset.
Lowe's forecasts full-year earnings in the range of $1.13 to $1.21 a share, from previous guidance of $1.13 to $1.15 a share. Analysts are looking for earnings of $1.23.
is set to report its second-quarter earnings on Tuesday.
Shares of the company fell 4% to $26 in pre-market trading.
-- Reported by Jeanine Poggi in New York.
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