outperforms Home Depot in stormy quarter
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[February 27, 2014]
By Maria Ajit Thomas
(Reuters) - Lowe's Cos Inc reported strong growth in quarterly
sales, showing that the No. 2 U.S. home improvement retailer was
narrowing the gap with market leader Home Depot Inc.
Lowe's shares rose as much as 5.5 percent in early trading, after
the company reported that net sales increased 5.6 percent to $11.66
billion in the fourth quarter ended January 31.
Home Depot on Tuesday reported a 3 percent decline in sales in the
same period, which was marked by winter storms and record cold in
much of North America.
"When extreme winter weather arrived late in the quarter, our
distribution network responded quickly and efficiently to move
product where it was most needed," Lowe's Chief Executive Robert
Niblock said in a statement on Wednesday.
Lowe's, which struggled to catch up with Home Depot after the
recession, has tried to arrest market share losses by offering
discounts and products aimed at specific regions.
The company posted a 3.9 percent rise in comparable store sales in
the fourth quarter.
"We believe that Lowe's has made significant operational strides,
and is now positioned to benefit from its investments in its store
resets and product line reviews," Credit Suisse analyst Gary Balter
wrote in a note to clients.
Lowe's gross margin expanded to 34.67 percent in the quarter ended
January 31 from 34.27 a year earlier.
Net income rose 6.3 percent to $306 million, or 29 cents per share,
from $288 million, or 26 cents per share.
"For businesses that are this mature, to find growth like this is
fairly difficult," Morningstar analyst Jaime Katz said.
Analysts on average were expecting a profit of 31 cents per share,
according to Thomson Reuters I/B/E/S.
Home Depot's net profit fell about 1 percent in the quarter.
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Lowe's said it expected 2014 total sales to rise by about 5 percent.
That translates to about $56.07 billion. The company also forecast
earnings of about $2.60 per share for the year ending January 30,
Analysts on average were expecting a profit of $2.64 per share on
sales of $56.25 billion.
The Mooresville, North Carolina-based company also said its board
had authorized an additional $5 billion share repurchase program.
Lowe's shares were up 5.3 percent at $50.65 in early trading on the
New York Stock Exchange. They had risen about 34 percent in the year
up to Tuesday's close.
Home Depot's shares, which were little changed at $81.13, rose about
27 percent in the same period.
Lowe's stock were trading at 18.03 times forward earnings as of
Tuesday's close, while Home Depot shares were trading at 17.54
(Reporting by Maria Ajit Thomas in
Bangalore; Editing by Joyjeet Das)
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