Lennar 3Q Loss Widens As Sales Remain Weak

Lennar Corp.'s (LEN) fiscal third-quarter loss widened amid write-downs on land and deferred tax assets as home sales remained weak.

The sector is seeing signs the worst of the housing downturn may have passed. Customers are returning to the market, spurred by fallen home prices, low mortgage rates and a federal tax credit for qualified first-time buyers. But rising foreclosures, rising unemployment and tight credit still pose challenges.

President and Chief Executive Stuart Miller said Monday that the housing market continued to recover as more-confident home buyers "took advantage of increased affordability," though unemployment and foreclosures remain a challenge. Lennar - one of the U.S.'s largest home builders - has increased the number of home starts, reduced the number of homes in inventory and repositioned itself toward first-time and value-focused buyers, he added.

For the quarter ended Aug. 9, Lennar reported a loss of $171.6 million, or 97 cents a share, compared with a prior-year loss of $89 million, or 56 cents a share. The latest period included 76 cents in write-downs, including on deferred tax assets which could have been used to offset future profit.

Revenue decreased 35% to $721 million.

Analysts polled by Thomson Reuters most recently were looking for a 46-cent loss on on revenue of $774 million.

Gross margin on home sales, excluding valuation adjustments, fell to 15.6% from 18%.

Orders fell 8% from a year earlier but Miller said it was the smallest such decline in nearly three years. Sequentially, orders rose each month, he noted.

Deliveries excluding unconsolidated entities declined 29% from a year earlier while the cancellation rate fell to 19% from 27%.

Shares closed at $16.54 on Friday and didn't trade premarket. The stock is up 90% this year.

-By Tess Stynes, Dow Jones Newswires; 212-416-2481; [e-mail]