The Wall Street Journalreports that Lowe's recorded a 22% decline in fiscal first-quarter earnings. The losses were not a surprise given the weak housing market. Lowe's thinks the housing market is going to improve. They released a more optimistic profit outlook for the rest of the year.
Lowe's said it now expects fiscal-year earnings of between $1.13 and $1.25 a share, up from February's reduced estimate of $1.04 to $1.20. "With consumer confidence having rebounded off its historic lows and some encouraging signs in housing, we may have hit the bottom, but how long we bounce along the bottom still isn't clear," Lowe's Chief Executive Robert Niblock said in an interview.
Mr. Niblock said he expects housing sales declines to bottom out in the first half of the year, housing prices to hit their lows in the first half of next year, and the unemployment rate to peak in the middle of 2010.
Lowe's first-quarter earnings and its guarded optimism about the housing market helped spark a rally in the stock market, with the S&P 500 index rising nearly 3%. Shares of Lowe's, the second-largest home-improvement retailer by sales behind Home Depot Inc., climbed 8% to $19.94 in 4 p.m. New York Stock Exchange composite trading. Home Depot reports results Tuesday.
Raising estimates is risky because if Lowe's is unable to match them its stock will take a hit when earnings are reported. Builders are optimistic that the housing market is about to rebound even though there is no sign that the pace of layoffs is slowing.
The Wall Street Journal 
