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Lowe's Retains Outlook - Analyst Blog

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"Never Stop Improving" - does Lowe's Companies Inc .'s ( LOW ) new tagline help the company to build long-term confidence among its consumers?

The answer is "yes" as the company remains on track to develop innovative ideas to adapt to the ever changing demands and preferences of its consumers.

Moreover, Lowe's boasts a proven strategy of investing in stores to enhance customer-shopping experience by improving point-of-sale and directional signage while adding more product selection. The company's sustained focus on Everyday Low Prices, New Lower Price, Go Local and Specialty Sales initiatives, have helped it to grow its market share.

Lowe's, which faces stiff competition from The Home Depot Inc . ( HD ), is also rationalizing its capital expenditures to improve its return on investment.

Further, Lowe's recently conducted its 2011 Analyst and Investor Conference, where it portrayed its sturdy financial position and strategic decisions to boost its long-term growth prospects.

Outlook Maintained

Following the announcement, the company stood by its earlier guidance and expects earnings between $1.57 and $1.60 per share in fiscal 2011, excluding charges of $0.20 related to store closings and discontinued operations

Total sales are expected to increase in the range of 2% to 3%, while comparable store sales are anticipated to inch down approximately 1%.

On a reported basis, including one time items, operating margin is expected to contract 80 to 90 basis points. However, excluding the charges related to store closings and discontinued operations, operating margin is expected to remain flat or decrease by 10 basis points.

Lowe's in a startegic move closed 20 underperforming stores across 15 states in the U.S. in October 2011 as the company dipped investments in sections of the business that no longer contributes significantly to its growth.

The company is also cutting new store growth targets, given the sluggish consumer environment and the trends in the housing market. Lowe's opened 42 stores in 2010, significantly down from 62 stores opened in 2009 and 115 stores opened in 2008. The company now expects to open 25 new stores during fiscal 2011.

Currently, we have a long-term 'Neutral' rating on the stock. Moreover, Lowe's holds a Zacks #3 Rank, which translates into a short-term 'Hold' rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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