Lowe's profit falls nearly 18 pct, lowers view

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A struggling economy and continued turmoil in the housing market drove the nation's second-biggest home improvement retailer to report a nearly 18 percent drop in first-quarter earnings from a year earlier and lower its guidance for the year on Monday.

Its shares fell more than 2 percent in afternoon trading.

Investors may see similar results from larger rival Home Depot Inc., who is expected to post lower first-quarter profit on Tuesday, pressured by declining sales and costs tied to store closures and a scale-back of future openings.

"It's been a challenging sales environment," said Lowe's Chairman and Chief Executive Robert A. Niblock in an interview with The Associated Press. "As we continue on in a tough environment, with rising other costs for the consumer, be it food or fuel or whatever, what happens on the employment front has yet to be seen and can certainly be more tough on more consumers."

Mooresville, N.C.-based Lowe's said net profit in the period ended May 2 fell 17.9 percent to $607 million, or 41 cents per share, from a year earlier. Sales slipped to $12.0 billion from $12.2 billion a year ago.

Analysts surveyed by Thomson Financial had been looking for net income of 40 cents a share on revenue of $12.4 billion. Estimates usually exclude one-time items.

"These results should not prove terribly surprising," wrote Goldman Sachs analyst Matthew J. Fassler in a client note.

The home improvement sector has been hurt as consumers pulled back on renovation spending in the face of falling home values, tighter credit requirements and higher prices for basic items such as food and gasoline.

Lowe's shares fell 64 cents, or 2.6 percent, to $24.25 Monday. Shares of Home Depot fell 23 cents to $28.87.

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