One word from a CEO can obscure an entire earnings reports. Home improvement giant Lowe’s (NYSE:LOW) reported lackluster earnings. However, its chief Robert A. Niblock said, “We are beginning to see signs of improved performance in some of the hardest-hit housing markets including California, Florida and areas of the desert Southwest.” Those areas were crushed so flat that it would require a massive turnaround the regions to do much to help the prospects of Lowe’s or Home Depot (NYSE:HD)
Lowe’s numbers were net earnings of $344 million for the quarter ended October 30, 2009, a 29.5% decline from the same period a year ago. Diluted earnings per share declined 30.3% to $0.23 from $0.33. Revenue fell 3% to $11.4 billion.
The most telling part of the Lowe’s earnings release is that sales in the current quarter will be flat with last year. The final period of 2008 was particularly poor for the housing market, so that there will be no improvement tells much more about Lowe’s prospects that the CEO statement does. Lowe’s aid expects comparable store sales to decline 2% to 6% so it will have to rely on firm pricing when the housing market is still in a severe recession.
The market, of course, listened to the CEO. Lowe’s shares moved up slightly to $22, just below that stock’s 52-week high of $24.09.
Douglas A. McIntyre