Sales edged up 1.3 percent to $14.5 billion, well below the company's 4 percent forecast, and same-store sales slipped 0.3 percent, reflecting continued macroeconomic weakness.
Major appliances was Lowe's poorest-performing category, with comp sales down by the mid-single digits, noted Credit Suisse retail analyst Gary Balter. But total comps improved throughout the quarter, the company said, rising 2.2 percent in July as the chain edges toward an everyday-low-price (EDLP) pricing strategy.
"Despite some recovery in our seasonal business, our performance for the quarter fell short of our expectations," acknowledged Lowe's chairman/president/CEO Robert Niblock. "We are working diligently to improve sales and profitability in the near-term in a way that we believe will generate sustained customer preference and shareholder value. We are also building momentum in 2011 behind our longer-term commitment to deliver even better customer experiences."
The earnings results included a charge for evaluating the carrying value of long-lived assets, including seven stores that closed on Aug. 14, which reduced pretax earnings for the quarter by $83 million.
During the quarter Lowe's opened two stores, bringing the store count to 1,753 locations in the U.S., Canada and Mexico as of July 29, for a total of 197.6 million square feet of retail selling space, up 1.5 percent over last year.
Looking ahead, the No. 2 home-improvement chain and major appliance retailer is projecting flat same-store sales and a 2 percent increase in net sales for its fiscal third quarter ending Oct. 28.
Archrival The Home Depot reports its second-quarter results tomorrow.