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Updated from 11:38 a.m. EDT

Shares of


(LOW) - Get Lowe's Companies, Inc. (LOW) Report

, hit a new 52-week low Friday after the world's second-largest home-improvement retailer projected that sales at stores open at least a year would fall below expectations, despite the company's assurances that earnings estimates remained on target.

Lowe's finished Friday regular trading down $1.31, or 3%, at $40.81. Earlier in the day, the stock fell as low as $38.

The Wilkesboro, N.C.-based home-improvement chain, second only to

Home Depot

(HD) - Get Home Depot, Inc. (HD) Report

in size, said comparable-store sales growth had been restrained by lower prices for lumber and building materials and by the process of converting the approximately 40

Eagle Hardware and Garden

stores that Lowe's acquired in 1999 into

Lowe's Home Improvement Warehouses

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As a result, Lowe's said it has lowered its estimates for comparable-store sales growth from its previous forecast of 4% to 6% growth in the third quarter, which ends on Oct. 27. Despite the sales revision, Lowe's still expects to meet the 53 cents-a-share consensus third-quarter earnings estimate among analysts surveyed by

First Call/Thomson Financial


Robert Tillman, Lowe's chairman and chief executive, assured investors that the process of integrating the Eagle stores into the Lowe's chain has now been completed. "We are encouraged by the progress that we have seen since the Labor Day transition and anticipate continuing improvement throughout the remainder of the year," Tillman said in a statement.

Analysts said Lowe's needs a quick turnaround in order to regain investors' confidence. "They will probably squeak by for the rest of the year, but next year sales are going to have to start talking," said Aram Rubinson, retail analyst at



Rubinson said that higher gas prices were weighing on the retail market, but that Lowe's was affected more than other retailers because of the lower prices for lumber products and the integration of the former Eagle stores. Still, he added that the problems that have affected the retailer "seem reversible."

PaineWebber is maintaining its buy rating on the stock, with no long-term target price. The firm has done underwriting for Lowe's within the past few years.


Deutsche Banc Alex Brown

downgraded Lowe's stock from a "strong buy" to a "buy" rating following the retailer's sales revision.

The problems at Lowe's appeared to weigh on Home Depot's stock as well, which was trading down $3.31, or 6%, to $50.44 late Friday morning.