Lowe's warns of earnings slide

NEW YORK (CNNMoney.com) -- Lowe's Cos., the No. 2 home improvement retailer behind Home Depot, on Monday said third-quarter profit rose but warned it would miss forecasts for the current period.

Earnings at Lowe's (Charts) came to $716 million, or 46 cents a share, compared with $646 million, or 40 cents a share, a year earlier. The result topped the 43 cent a share forecast of analysts surveyed by earnings tracker First Call.

But Lowe's said it expects to earn 36 to 38 cents a share in the fiscal fourth quarter, which runs through Feb. 2. First Call had been forecasting earnings of 41 cents a share, although the better than expected third quarter may let it still meet the full-year forecast of $1.97 a share. It said it expects EPS of $1.95 to $1.97 for the full fiscal year.

Sales at stores open at least a year, an important retail gauge known as same-store sales, fell 4 percent in the quarter. The company blamed the weak sales comparison on the combined effects of a slowing housing market, significant deflation in certain commodity categories, and a difficult comparison to last year, when there was significant spending on hurricane recovery and rebuilding efforts.

"We believe many external headwinds will exist through the balance of the year and the first half of fiscal 2007," said a statement from Lowe's Chairman and CEO Robert Niblock.

Last week Home Depot (Charts) reported weaker than expected earnings, as its executives citing a slowing U.S. economy, declining home sales and prices, and fewer refinancings for the weaker than expected performance of its retail division.

Housing starts and building permits both fell sharply in October, the government reported Friday, as builders responded to weaker prices and a large inventory of homes for sale by stopping building.