By Dhanya Skariachan
NEW YORK (Reuters) - Lowe's Cos reported weaker-than-expected quarterly results on a slow start to the spring selling season, prompting the world's second-largest home improvement chain to cut its forecast for the year.
The disappointing results in a key season renewed concerns about demand levels in an uneven U.S. economy and pushed Lowe's shares down 5.3 percent. Shares of Wolseley, the world's largest plumbers and builders merchant, also slipped on the news.
Lowe's slashed its fiscal-year profit forecast to $1.56 to $1.64 a share, down from its prior outlook of $1.60 to $1.72, raising concerns about demand for the rest of the year.
The home improvement industry is "suffering from a perfect storm of a cold spring, a four-year drought in the housing market and a rising tide of food and fuel prices, which are all conspiring to depress discretionary demand," said Craig Johnson, president of Customer Growth Partners.
Analyst Christopher Horvers at JPMorgan said the reduction in Lowe's fiscal-year outlook was unexpected.
The lowered outlook implies Lowe's has less confidence about sales in its second half, Credit Suisse analyst Gary Balter said.
"There is little evidence that the underlying housing market in America is stabilizing, and improvements from the macro are looking more like a 2012 event, if then," Balter said.
Lowe's results raise a lot of questions, RBC Capital Markets analyst Scot Ciccarelli said.
"Is it all weather? Is it the impact starting to get felt from higher gas prices? Or probably, most ominously, is it the recent double dip we started to see in home prices?" Ciccarelli said.
(For a graphic on Lowe's earnings, click http://r.reuters.com/suq59r.)
INCLEMENT WEATHER HURTS
Both Lowe's and larger rival Home Depot Inc are up against strong numbers from last year, when a first-time home buyer tax credit and a "cash for appliances" program boosted demand. Home Depot is due to report its quarterly results on Tuesday.
Colder-than-usual weather in the first quarter also kept shoppers away in many parts of the United States, Lowe's main market.
"During the quarter, we faced ongoing economic pressures, unfavorable weather conditions and tough comparisons to last year's government stimulus programs," Chief Executive Robert Niblock said in a statement.
Lowe's shares fell $1.36 to $24.40 in premarket trading.
Sales at stores open at least a year fell 3.3 percent in the first quarter. Horvers at JPMorgan expected only a 2 percent decline.
Net income fell to $461 million, or 34 cents a share, in the quarter, ended on April 29, from $489 million, or 34 cents a share, a year earlier. Analysts on average were expecting 36 cents a share, according to Thomson Reuters I/B/E/S.
Sales fell 1.6 percent to $12.19 billion, missing analysts' average estimate of $12.52 billion.
For the second quarter, Lowe's forecast sales increases of about 4 percent overall and about 2 percent on a same-store basis. It expects earnings of 65 cents to 69 cents a share.
For the fiscal year ending on February 3, 2012, the company sees sales rising about 4 percent, with same-store sales flat to up 1 percent.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Maureen Bavdek and John Wallace)
