By Michael Calia
Lowe's Cos. reported higher sales in the fourth quarter as the
retailer said it expected the home-improvement sector to continue
improving this year, but it warned of uncertainty and potential
economic pressures.
The outlook takes into account expectations of continued
improvement in employment and income in the U.S. as well as the
potential for an interest-rate increase from the Federal Reserve
and the ensuing effect on housing prices, Chief Executive Robert A.
Niblock said.
"There's likely to be a few headwinds to come our way by the end
of 2015," Mr. Niblock told The Wall Street Journal in a telephone
interview Wednesday.
The company's guidance for the new year is mostly in line with
consensus views. Lowe's said it expects to post $3.29 a share in
earnings for the year ended Jan. 29, 2016, with total sales rising
4.5% to 5%. Analysts polled by Thomson Reuters had projected $3.28
a share in earnings and 5% revenue growth.
While Lowe's expects continued "great demand" for existing
homeowners to invest in projects, Mr. Niblock said he is concerned
about the impact of rising interest rates and home prices on
prospective new home buyers. Additionally, he raised the
possibility of gasoline prices turning higher and crimping
consumers' spending.
Like rival Home Depot Inc. executives, Mr. Niblock said he
couldn't quantify how much, if any, lower gasoline prices were
fueling improved sales at Lowe's, but he left room for the
possibility. "Generally, lower fuel prices or anything that puts
more disposable income in consumers' pocket is a net positive," he
told the Journal.
The CEO added that global foreign-exchange pressures have had a
"minimal impact on results," but he said the company was concerned
about any potential ripple effects a stronger U.S. dollar could
have on the U.S. economy.
Lowe's said its sales rose in the fourth quarter as demand from
retail customers picked up in the period to keep pace with
continued strength from contractors.
Same-store sales at locations open at least year rose 7.3% in
the quarter ended Jan. 30. Sales at U.S. Lowe's stores rose
7.4%.
Overall, Lowe's posted a profit of $450 million, or 46 cents a
share, in the most recent quarter, up from $306 million, or 18
cents a share, a year earlier.
Net sales rose 7.6% to $12.54 billion.
Analysts had expected earnings of 43 cents a share and revenue
of $12.31 billion in revenue for the period.
Write to Michael Calia at michael.calia@wsj.com
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