LOW Lowes Companies Inc

By Anne Steele 

Lowe's Cos. posted earnings sharply below expectations in the latest quarter as the home-improvement retailer reported disappointing comparable sales growth.

Shares in the company, which have risen 7.2% so far this year, dropped 4.9% to $77.50 in premarket trading Wednesday morning.

Lowe's also lowered its guidance for the year to reflect the impact of its acquisition of Canadian home-improvement chain Rona Inc.

For 2016, the company now expects earnings of about $4.06 a share, down from previous guidance for $4.11 a share. Lowe's backed its guidance for comparable-store sales to rise 4%. Total sales are expected climb 10%, above analyst estimates for 8% growth.

Wednesday's report from Lowe's follows strong results from larger rival Home Depot Inc. on Tuesday. Though the retail sector has struggled with dwindling foot traffic and sales lost to online retailers like Amazon Inc., the home-improvement retailers have benefited from an improving housing market. While shoppers have cut spending on things like apparel, they have been willing to shell out for refurbishing their dwellings amid favorable housing trends.

Chief Executive Robert Niblock said results were "in line with our expectations," and the company is "well positioned to capitalize on a favorable macroeconomic backdrop for home improvement in the second half of this year."

During the quarter, sales at stores open at least a year grew 2%. U.S. same-store sales rose 1.9%.

In all for the July quarter, Lowe's posted a profit of $1.17 billion, or $1.31 a share, up from $1.13 billion, or $1.20, a year earlier. The quarter's results were dented by $84 million, or six cents a share, due to a loss on a foreign-currency hedge entered into in advance of the company's Rona acquisition.

Revenue climbed 5.3% to $18.26 billion. Analysts polled by Thomson Reuters had projected $1.42 a share in adjusted earnings on $18.45 billion in revenue.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

August 17, 2016 07:29 ET (11:29 GMT)

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