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At its annual analyst and investor conference in Charlotte, N.C., Lowe’s made few predictions about when the housing crisis will end but told those gathered that it will continue to shore up sales programs and forge ahead with expansion plans.
The company reported that it plans to open 135 to 145 stores in 2008, and that it will continue to grow areas like installed sales -- part of the Do It For Me (DIFM) category -- as well as special order, commercial and Internet sales.
CEO Robert Niblock said that while housing pressures have had a regional impact on Lowe’s business, credit market woes are affecting home improvement customers nationwide. “Therefore, the sales environment is challenging as consumers hesitate on larger discretionary projects," he said.
At the same time, Niblock said, the average ticket at a Lowe’s store was $68.31 for the second quarter, down only $1.50 from the same period in 2006.
The conference came a day after Lowe’s had issued a warning that it will hit the low end or go slightly below its fiscal year earnings projections.
The company predicts earnings of $1.97 to $2.01 per share. From 2008 to 2010, the company said it expects earnings growth of 12 percent to 15 percent per year and sales growth of 8 percent to 11 percent per year.
“External pressures weigh on our near-term performance, but looking past the current cycle, we see many opportunities for continued sales and earnings growth and increasing cash flow from operations,” said Robert Hull, executive vp and CFO in a statement. “The current pressures will likely continue into 2008, so we expect our earnings performance to improve from mid-single digit growth in 2008 to high-teens in 2010.”
The company cited drought conditions in the Western, Southeastern and Mid-Atlantic regions for the lower earnings, saying the poor conditions hurt sales in the outdoor segment.