Lowe’s Cos., the nation’s second-biggest home improvement retailer, reported an 18 percent rise in second-quarter earnings Monday, indicating the home building and remodeling markets remain relatively healthy despite a sluggish U.S. economy.
The Wilkesboro, N.C.-based company, which ranks behind only Home Depot Inc., said for the second quarter ended Aug. 3 it had net income of $329.1 million, or 42 cents per diluted share, compared with $279.6 million, or 36 cents per share, a year earlier.
The results, which reflect last month’s 2-for-1 stock split, were at the high end of analysts’ projections of 40 to 42 cents per share, and a penny above the consensus estimate of 41 cents, according to Thomson Financial/First Call.
Sales rose 15 percent, to $6.1 billion from $5.3 billion a year earlier. Sales at stores open at least a year increased 1.7 percent, reversing a 3 percent decline in the first quarter.
Jefferies & Co. analyst Donald Trott said the report was “further confirmation that Lowe’s is executing their business very well.
“In October, the consensus growth rate for Home Depot was 24 percent. It’s now 20 percent. In December, the consensus growth rate for Lowe’s was 17 percent. It’s now 21 percent,” said Trott, who added that additional interest rate cuts by the Federal Reserve also could help the company.
Customer count rose 14 percent in the second quarter, with the average receipt up 2.3 percent, to $56.85. Categories with stronger sales included millwork, lumber, flooring and nursery products. Lowe’s said tax rebate checks helped fuel some of the sales increase.
Lowe’s operates 700 stores in 40 states. It plans to open 35 to 38 new stores in the third quarter.
Lowe’s shares rose $2.80, or nearly 8 percent, to $37.84 on the New York Stock Exchange.
– Paramus, N.J.-based Toys “R” Us Inc. reported a second-quarter loss of $29 million, matching Wall Street expectations that were revised last month after the company warned of lower profits because of the sluggish economy and continued investments in store remodeling.
However, Toys “R” Us shares rose more than 7 percent on the NYSE after the nation’s second-biggest toy retailer, behind only Wal-Mart, said it expects to become profitable by the fourth quarter.
Toys “R” Us said it lost 15 cents per share for the three months ended Aug. 4. That compares with a profit of $3 million, or a penny per share, in the year-ago period.
Sales for the period were $2.02 billion, up 1 percent from $1.99 billion a year ago. Excluding the impact of currency translation, sales gained 3 percent. Same-store sales were unchanged from a year ago. In the first quarter, same-store sales declined 2 percent.
The retailer said that it is well-positioned to deliver a fourth-quarter profit in line with analysts’ estimates of $1.52 per share.
“We were concerned they would give us news that would cause us to bring our estimates down, but they didn’t,” said Margaret Whitfield, an analyst at Tucker Anthony Capital Markets, who upgraded the company’s stock to “buy” from “market perform.”
Shares of Toys “R” Us advanced $1.62, to $24.02.
– Agilent Technologies Inc. reported a third-quarter loss that was narrower than Wall Street had expected but said it is slashing 4,000 jobs because business is expected to stay sluggish.
The job cuts amount to 9 percent of Agilent’s worldwide workforce. The move follows the company’s decision in April to cut all employees’ pay by 10 percent. The Palo Alto, Calif.-based company, which makes measurement equipment for the communications and semiconductor industries, was spun off in 1999 from Hewlett-Packard Co.
“This decision is one we don’t make lightly,” said Chief Executive Ned Barnholt. “This is by far the worst industry downturn I’ve seen in my 34 years with the company.”
Agilent said the job cuts will save the company about $500 million a year.
In the quarter that ended July 31, Agilent reported a net loss of $219 million, or 48 cents per share, compared with a profit of $155 million, or 34 cents per share, a year ago. Revenue fell 25 percent, to $1.8 billion from $2.4 billion.
Excluding one-time charges, Agilent said its operating loss was $109 million, or 24 cents per share. The average estimate from analysts was for a loss of 35 cents per share, according to Thomson Financial/First Call.
Agilent shares slid 36 cents, to $26.09, on the NYSE.
– Korn/Ferry International, a New York-based executive recruitment firm, said it would eliminate 500 jobs, about 20 percent of its workforce, and post a loss for its first quarter because of the weak economy and a consequent slowdown in hiring.
Excluding one-time charges, Korn/Ferry expects to lose 5 to 8 cents per share in the quarter ended July 31, compared with earnings of 26 cents per share in the first quarter of last year. The news surprised analysts, who had expected a profit of 18 cents per share.
Revenue is expected to decline 34 percent from a year earlier, to $114 million.
Shares of Korn/Ferry fell $1.30, to $13.89, on the NYSE.
– The privately owned NYSE reported a drop of nearly 12 percent in first-half profit despite a rise in revenues and trading volumes. It said it earned $41.7 million on revenues of $444.7 million in the first six months of 2001, compared with net income of $47.3 million on revenues of $394.9 million in the same period last year.
An average of 1.22 billion shares, worth $45 billion, changed hands on a typical day at the NYSE during the first half of the year. During the first six months of 2000, an average of 1.03 billion shares, worth $45.4 billion, changed hands daily.
Despite the prolonged stock market slide, which has taken a bite out of the number of initial public offerings, the NYSE added 64 companies to its stable in the first half of the year, compared to 46 in the same period of 2000.
