Lowe's Lowers its Forecast, Again

Aug.22.06 | About: Lowe's Companies, (LOW)

Rob Zenilman submits: In today's Wall Street Journal, Gary McWilliams' Lowe's Net Rises, but Outlook Is Cut details how number 2 home improvement retailer Lowe's (NYSE:LOW) is joining the expanding list of retailers who are lowering their fiscal year forecasts.

Lowe's reported Q2 net income of $935mm ($0.60/share), up 11% from last year's $835mm ($0.52/share). Analysts were expecting $0.61/share. For the same period, revenue increased 12%, to $13.39b. Same store sales (stores open at least 1 year) increased by 3.3%, the lowest increase since 2003, and at the low end of Lowe's forecasted 3%-5% increase.

For the second time, Lowe's is reducing its current fiscal year forecast. Fiscal year earnings are now expected to come in between $2.00-$2.07/share, down from the previous forecast of $2.07-$2.11/share. Sales, previously forecasted to increase 13%, are now expected to increase by 11%.

Comment: The list of retailers lowering their forecasts seems to be getting longer every day. Lowe's reduced forecast is not a surprise, and there are many factors at play here. For long term investors, it will be interesting to see if Warren Buffet changes his position in the stock.