Aug 19, 2003 By Paul Nowell Ap Business Writer 3 min read

CHARLOTTE, N.C. (AP) – Lowe’s Cos. Inc., the nation’s second-largest home improvement chain, reported a nearly 28 percent gain in its second-quarter earnings Monday as homeowners caught up on spring projects delayed by cold and wet weather. The shares gained more than 6 percent. The Wilkesboro, N.C.-based company posted a profit of $597 million, or 75 cents per share, for the quarter ended Aug. 1, up from $467 million, or 59 cents per share, in the same period a year ago.

Analysts surveyed by Thomson First Call projected earnings per share of 69 cents.

Lowe’s shares were up $3.06 to close at $51.96 on the New York Stock Exchange.

“Very impressive numbers,” said Bernstein analyst Colin McGranahan, who follows Lowe’s stock. “Across the board, they showed strong momentum on things such as comparative store sales.”

Lowe’s was well-positioned to take advantage of the pent-up demand for hardware and other products, he said.

“They responded to the ramped-up demand by having the right products available,” McGranahan said. “There’s been a lot of strong (home mortgage) refinancing activity and a lot of homeowners have the money to work on their houses.”

Sales increased 17 percent to $8.77 billion, up from $7.49 billion in the year-ago quarter. Comparable store sales for the second quarter increased 6.9 percent.

“As we had expected, Americans’ passion for home improvement projects surged as the weather improved across most of the U.S.,” said Lowe’s chairman and chief executive officer Bob Tillman.

Lowe’s said it had “sales strength in every product category, including big-ticket items” as consumers returned to the hardware stores to catch up on projects.

“When customers returned to our stores following the cold and wet months that started the year, our employees delivered great service and the merchandise our customers wanted,” said Lowe’s president Robert Niblock.

On a conference call with analysts, Tillman said the chain was prepared to provide homeowners and contractors with the materials they needed to handle what he called “America’s passion for improvement.”

“The home improvement industry has benefited from this (refinancing boom), but it is not the single driver of our business,” he said. “The recent increase in interest rates doesn’t signal the end of our growth.”

Spending on home improvement is expected to increase by about 5 percent annually over the next several years, he said. “As the economy strengthens, consumers will be more inclined to invest in their homes,” Tillman said.

Looking forward, Lowe’s said it expects to earn $2.24 to $2.27 a share for the year, ahead of analyst estimates of $2.19 per share. The company also expects a 16 percent increase in sales, and a 4 percent to 5 percent rise in comparable-store sales.

Lowe’s opened 24 new stores during the second quarter, including two relocations, and closed one older, smaller store. Lowe’s operates 896 stores in 45 states and plans to open 38 stores in the third quarter.

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