Lowe's says its net earnings fell 24.1% to $488 million for the quarter, while sales eked out a 1.4% gain to $11.7 billion. But on a comparable-store basis, a measure watched closely by retailing experts, sales fell 5.9% for the quarter.
"Products related to ongoing home maintenance and outdoor projects continued to perform relatively well," its CEO says in a release. "However, consumers continued to delay discretionary home improvement and bigger ticket purchases, which resulted in negative comparable store sales in the quarter."
The company also says it sees that weakness continuing. "We expect continued, broad-based external pressures on our industry, as rising unemployment, falling home prices, tight credit and volatile equity markets continue to erode consumer confidence and impact sales," he says. "We remain cautious in the near term." Next quarter, it predicts that comparable-store sales results will fall somewhere in the range of a 3% decline to a 2% gain. For the full year, it expects those results to decline between 6% and 7%.
Stores like Lowe's and its bigger rival, Home Depot--which is expected to report its quarterly results Wednesday--have been especially affected by the real estate downturn.
Meanwhile, Minneapolis-based Target says its third-quarter earnings skidded 23.8% to $369 million. And while total sales gained 1.7% to $14.6 billion, same-store results lost 3.3%. "Our third-quarter financial results reflect the significant macroeconomic challenges facing our retail and credit card segments," its CEO says in the earnings release. "Our entire Target organization is focused on providing compelling reasons for our guests to shop at Target in these difficult times."
Also on Monday, the Federal Reserve Bank of Philadelphia said it surveyed 51 U.S. economists, who unanimously say the country is either in or about to enter a recession. (This could be considered good news--since the forecasters think the recession started back in April and will last 14 months, so we must be already about halfway though it.)
And while no one can accurately predict how consumers will shop--or not--through the downturn, bargain prices are likely to continue to be a big factor.
A new poll from the National Retail Federation reports that 72% of consumers have completed less than 10% of their shopping, as they eagerly await Black Friday promotions. And while the same categories are likely to dominate (with 57.4% planning to buy clothing and accessories and 55.6% planning to purchase books, CDs, DVDs and video games), there is a significant change in how they will pay.
The NRF survey reports that more consumers are planning to pay with cash, and less with credit--with 41.5% saying they will use their debit/check cards, up from 40.1% at this time last year. About 22.8% plan to use cash, up from 22.1% a year ago. And just 31.5% plan to use a credit card, down from 32.3% last year.