Lowe's Bumps Up Outlook as Results Top Views -- 2nd Update

By Michael Calia 

Lowe's Cos. on Wednesday raised its outlook after its sales and profit grew in the most recent period as the company maintained its cautious optimism about the home-improvement sector.

Shares of the company rose about 5% in recent premarket trading as the results exceeded analysts' expectations.

The company expanded its expectations for full-year sales growth to 4.5% to 5%, up from a projection of 4.5%. It also sees same-store sales expanding 3.5% to 4%, compared with its previous guidance of 3.5%. Lowe's had previously lowered its guidance in August.

The company also increased its earnings forecast for the year ending Jan. 30 by five cents a share to $2.68.

Lowe's posted its results for the most recent period a day after bigger rival Home Depot Inc. reported sales that exceeded expectations and reiterated its confidence in a slow-but-steady U.S. housing recovery.

Lowe's also sees encouraging signs in the housing, pegging consumer confidence in the market at prerecession highs. Chief Executive Robert A. Niblock said during a conference call Wednesday that customers--buoyed by lower fuel prices and interest rates, as well as home-value appreciation--are looking to invest in their homes more now than at any point since 2006.

"We are pleased with our performance, and continue to be cautiously optimistic about the home improvement landscape," Mr. Niblock said in a news release.

Lowe's said same-store sales rose 5.1% in the period, compared with Home Depot's 5.2% increase.

Mr. Niblock said during the call that average ticket rose 3.4%, while transactions grew 1.7%. He added that the company has experienced an "encouraging" rise in big-ticket purchase, although most home-improvement purchases have been smaller.

For the quarter ended Oct. 31, Lowe's posted earnings of $585 million, or 59 cents a share, up from $499 million, or 47 cents a share, a year earlier.

Net sales rose 5.6% to $13.68 billion.

Analysts had projected 58 cents a share in earnings and $13.55 billion in revenue.

Write to Michael Calia at [e-mail]

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