• February 26, 2008

No one was expecting Lowe's Cos. Inc. to report good news, what with the way the soft real-estate market had been pummeling home-improvement stores and all.

But few expected the news to be this bad: The company says its net earnings dropped 33.4% in its latest quarter, to $408 million. And for the fiscal year, which ended Feb. 1, earnings dipped 9.5% to $2.81 billion. Comparable store-sales, a measure watched closely by retail experts, fell 7.6% for the fourth quarter, and 5.1% for the year.

The company says the poor performance is due to "an unprecedented decline in housing turnover, falling home prices in many areas and turbulent mortgage markets that impacted both sentiment related to home improvement purchases as well as consumers' access to capital."

And while it predicts continued tough times for the next several quarters--and overall, is predicting a comparable-store sales decline of between 5 and 6 % for its next fiscal year--thanks to lower interest rates and the government's stimulus package, "many of the headwinds facing the housing market and the home improvement industry should lessen, and consumers' confidence in investing in and improving their homes should improve."

--Sarah Mahoney