Lowe's (LOW) Q3 Profits Fall But Top Views Excluding One-Time Items

Lowe's Companies, Inc. (NYSE: LOW) reported better-than-expected results for the third quarter and lifted the low end of its full year guidance.

Sales at the home improvement giant increased 2.3 percent to $11.9 billion in the quarter, up from $11.6 billion in the third quarter of 2010. The consensus for the quarter was $11.7 billion.

The cost of total sales was 66 percent of the total revenue, 1 percent higher than the total cost of sales a year ago.

The company announced earnings of $225 million for the quarter, a 44.3 percent decline from the same period a year ago. Diluted earnings per share decreased 37.9 percent to $0.18 from $0.29 in the third quarter of 2010. Excluding a charge of $0.17 for store closings and discontinued projects, earnings in the quarter were $0.35 per share which topped the consensus of $0.33.

Cash and cash equivalents fell $403 million year over year to $675 million but rose $23 million since the end of January.

"Our performance is not at the level we expect relative to the market," commented Robert A. Niblock, Lowe’s chairman, president and CEO. "We are making the changes necessary to right size the organization, improve speed to market and enhance the shopping experience. We are keenly focused on improving our core business while also developing new capabilities and services for the future. I am confident we are moving forward on a clear path that is not dependent on an unlikely near-term economic recovery."

"I would like to thank our hard-working employees for their ongoing dedication and customer focus during a time of significant change," Niblock added.

For the fourth quarter, management forecasts total sales will increase roughly 8 percent year over year. The company expects comparable store sales of flat to 1 percent. Earnings before interest and taxes as a percentage of sales are expected to decrease approximately 50 basis points. Diluted earnings per share of $0.20 to $0.23 are expected. The consensus currently estimates total sales of $11.25 billion and earnings of $0.23 per share for the fourth quarter.

For they year, Lowe's sees sales rising 2 to 3 percent which includes a 53rd week that will drive 1.5 percent of the rise. Diluted earnings per share is seen at $1.57 to $1.60, ex-items, verus the consensus of $1.59.

Shares of LOW are trading up 0.39 percent in the pre-market hours of trading today.

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