Mooresville, N.C. - Lowe's, the nation's No. 2 appliance chain, said second-quarter net earnings fell 19 percent to $759 million due to the weak economy and soft demand for home-improvement products.
Sales for the three months, ended July 31, slipped 4.6 percent to $13.8 billion, and comp-store sales declined 9.5 percent, the company reported.
"Wavering consumer confidence, unseasonable weather in core markets, and restrained customer spending compared to last year's fiscal stimulus-aided results led to lower-than-expected sales in the second quarter," chairman/CEO Robert Niblock said. "Cautious consumers remain reluctant to take on discretionary projects until signs of economic improvement are more evident."
In response to the challenging economic environment, the No. 2 home-improvement chain will cut back next year's new store openings to between 35 and 45, which added a pretax charge of $48 million for the quarter.
Despite weak sales, Lowe's gained market share and achieved "reasonable earnings" during the quarter due to sound execution, disciplined inventory management and solid expense control, Niblock said.
Although customer traffic is stabilizing, he said, and indicators suggest that a bottoming in housing and the broader economy is underway, Lowe's is projecting comp-store declines of 6 percent to 10 percent for the current quarter and is maintaining a "cautious outlook" for second-half sales.
Lowe's opened 18 stores through July 31, bringing its store count to 1,688 locations in the United States and Canada.