Lowe's cuts 2009 store growth amid housing woes

ATLANTA (Reuters) - Lowe's Cos Inc said on Wednesday it would cut store growth for next year as much as 38 percent as the soft U.S. economy and housing slump hampers demand at its home improvement stores.

Lowe's, the second-largest home improvement retailer behind Home Depot , also backed its profit forecast for 2008 and said it still expects strong growth once the housing market recovers.

Lowe's plans 75 to 85 new stores in 2009, down from about 120 it expects this year.

"While a pullback in the pace of our expansion is appropriate given the pressures in many markets, we continue to see opportunity for new store growth in the years ahead," Gregory Bridgeford, Lowe's executive vice president for business development, said in a statement.

Lowe's, which is holding an analyst meeting on Wednesday, reiterated an August forecast calling for profit of $1.48 to $1.56 a share for this year. That would be down from $1.86 a year earlier.

For 2009, Lowe's forecast profit of $1.40 to $1.65 a share.

Analysts currently expect profit of $1.53 a share for 2008 and $1.57 for 2009, according to Reuters Estimates.

The Mooresville, North Carolina, retailer said it expects per-share earnings to more than double over the next five years as the housing market recovers.

"There's risk to that statement," Gabelli & Co analyst Zahid Siddique said. "Given where the consumer is and where the housing market is, I think we will continue to see weakness for quite some time."

The retailer, which has spent recent years expanding into big cities nationwide, had been expected to pare its store growth for 2009. Lowe's scaled back its 2008 openings to about 120, saying it would halt some in markets hardest hit by housing troubles.

"Slower footage growth is a good thing -- putting less pressure on existing stores and pre-open expenses," Stifel Nicolaus analyst David Schick said in a research note.

At its 2007 analyst meeting, Lowe's had said it would open 135 to 145 stores in North America annually through 2010.

The home improvement sector has seen weak results as the slumping U.S. housing market, tighter credit and rising gasoline and food costs weigh on consumer spending.

Lowe's posted its fourth straight quarterly profit decline last month, while earnings at industry leader Home Depot have fallen for the past eight quarters.

Atlanta-based Home Depot, which has said per-share profit could drop 24 percent this year, has also cut back store growth. This year, it closed about 15 underperforming stores and scrapped plans for about 50 outlets that had been in its pipeline.

Lowe's shares rose 11 cents to $23.73 in morning trading on the New York Stock Exchange, while Home Depot eased 40 cents, or about 1.6 percent, to $24.86. Lowe's is trading at about 15.5 times expected 2008 earnings, compared with a multiple of 14.3 for Home Depot.

(Editing by Dave Zimmerman and Maureen Bavdek)