Lowe's misses sales forecasts as Canada business struggles

[February 27, 2019]    (Reuters) - U.S. home improvement chain Lowe's Companies Inc missed Wall Street forecasts for same-store sales on Wednesday, citing poor performance in Canada.

A view of the sign outside the Lowes store in Westminster, Colorado February 26, 2014. REUTERS/Rick Wilking/File Photo

The results follow disappointing numbers from larger rival Home Depot on Tuesday on the back of a cold and wet winter.

Since taking over in July last year, Lowe's Chief Executive Marvin Ellison has shrunk its struggling Canadian business to less than 300 stores in efforts to boost earnings.

The moves led Lowe's to record a pre-tax expense of $150 million during the fourth quarter to account for severance and lease obligation costs.

"We anticipate continued weakness in the Canadian housing market in the near-term, but remain confident in our market position in Canada and the long-term potential of that business," Ellison said in a statement.

The company maintained its sales and earnings projections for 2019.

Sales at Lowe's stores open for at least 13 months rose 1.7 percent in the fourth quarter ended Feb. 1, below analysts' average estimate of a 2.03 percent increase, according to IBES data from Refinitiv.

It reported a net loss of $824 million, compared with a profit of $554 million a year earlier. Lowe's recorded $1.6 billion in pre-tax charges, reflecting store closures across North America.

Excluding one-time items, the company earned 80 cents per share, 1 cent more than Wall Street analysts had expected.

Net sales overall rose about 1 percent to $15.65 billion, but missed expectations of $15.74 billion.

(Reporting by Nivedita Balu in Bengaluru; Editing by Sai Sachin Ravikumar)

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