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Lowe's Touts Gains in Q1, Preps for More in Q2 and 2010

Lowe's Companies Inc. experienced a 2.7% increase in net earnings to $489 million for the first quarter ended April 30 and also saw its diluted earnings per share increased 6.3% to 34 cents from 32 cents in the same period last year.

In more good news from the quarter, the 1,721-unit home improvement chain, with stores in the U.S., Canada and Mexico, reported a 4.7% increase in sales to $12.4 billion, up from $11.8 billion in the first quarter of 2009 and a 2.4% increase in comparable store sales for the period.

“Consumers are showing signs of reengagement in home improvement, including discretionary projects and purchases of bigger ticket products, which had taken a back seat during the worst of the economic downturn,” said Robert A. Niblock, chairman and ceo. “This, combined with the government stimulus programs and favorable weather in March and April, drove solid quarterly sales and earnings that exceeded our guidance.”

Encouraged by these favorable results, Lowe's offered its outlook for the second quarter, which ends July 30, compared with the same period in 2009. Total sales and comp store sales are both expected to increase, by 5% to 7% and 2% t0 4%, respectively. The company also expects to open approximately four new stores reflecting square footage growth of approximately 2%. Operating margin is expected to increase about 40 basis points. Depreciation expense is expected to be approximately $400 million. And diluted earnings per share are targeted to hit a range of $0.57 to $0.59.

For fiscal 2010, the company expects to open 40 to 45 stores, reflecting total square footage growth of approximately 2%. Total sales are expected to increase 5% to 7%, and comps are also expected to increase but between 2% and 4%. Operating margin is expected to increase about 60 basis points, and depreciation expense is expected to be $1.60 billion. Diluted earnings per share are projected to be between $1.37 and $1.47.

“While we are optimistic we will experience solid demand through the balance of the year, we view 2010 as a year of transition for our industry,” Niblock explained. “We remain confident that our commitment to providing excellent customer service, combined with great merchandising, will drive profitable sales and market share growth.”

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