Lowe’s and Home Depot hit as consumer downturn bites

Lowe’s suffered a 60.3 per cent slump in profits to US$162m (£109.4m) in the three months ending January 30. Like-for-like sales dropped 9.9 per cent and total sales fell 3.8 per cent to US$9.98bn (£6.83bn).

In the year to the same date earnings declined 21.9 per cent to US$2.2bn (£1.5bn). Comparable store sales slid 7.2 per cent and total sales were down 0.1 per cent to US$48.2bn (£32.9bn).

However, analysts said Lowe’s performance could be favourable compared with rivals and that it had improved market share. On Tuesday Home Depot, the world’s biggest DIY group, revealed net losses of US$54m (£37.2m) in its fourth quarter compared with profits of US$671m (£462.5m) the
previous year.

Like-for-like sales fell 11.5 per cent. Total sales dropped 17.3 per cent to US$14.6bn (£10bn). The retailer said that last year profits plummeted from US$4.4bn (£3.03bn) to US$2.3bn (£1.58bn).

Edward Whitefield, chairman of consultancy MHE Retail, said: “Lowe’s is performing relatively well. The US housing market has slumped and Lowe’s competition’s profits could be down by as much as 100 per cent. Lowe’s is a good operation and has continued to grow market share, looking at these figures.”

Lowe’s said despite the margin hit, promotional activity had “helped improve the company’s inventory position heading into fiscal 2009”.

Lowe’s chairman and chief executive Robert Niblock said: “Through disciplined expense control we delivered respectable earnings for the quarter and fiscal 2008. We have made significant progress in refining our cost structure during the three-year downturn in our industry and have managed our staffing, both in our stores and in our corporate office, to match the slowing sales environment.”

He added: “While we have a conservative plan for 2009, we continue to look critically at all expenses and have the flexibility to further reduce our expense structure should sales be weaker than expected. In the present environment our goal remains to balance expense control with our commitment to customer service.”