Earnings Preview: Lowe's to benefit from rebound

Analysts expect higher net income, revenue in Lowe's 2nd quarter

Associated Press

NEW YORK (AP) -- When home-improvement chain Lowe's Cos. reports its fiscal first-quarter earnings result before the market opens Wednesday, analysts will be interested in whether consumers shopped more during key spring and summer months and if Lowe's pricing strategy is paying off.

Analysts expect higher revenue and net income from the No. 2 home improvement retailer.

WHAT TO WATCH FOR: Lowe's and other retailers are enjoying easing pressure as the housing market slowly improves. Steady price increases are the latest sign of a recovery in housing and on Aug. 6, CoreLogic, a real estate data provider, said U.S. home prices surged 11.9 percent in June from a year earlier. Stable job gains and still-low mortgage rates have encouraged more Americans to buy homes. Greater demand, along with few homes for sale, has helped push up prices.

Analysts will be looking for an update on Lowe's plans to expand its presence in California by buying Sears spinoff Orchard Supply Hardware Stores for about $205 million is going.

Meanwhile, investors will be looking for an update on how Lowe's revamped pricing strategy is faring. The chain has returned to offering what it says are permanent low prices on many items across the store instead of fleeting discounts.

WHY IT MATTERS: Strong sales would be another sign that Americans are feeling better about the economy and the housing market.

WHAT'S EXPECTED: Analysts expect earnings of 79 cents per share on revenue of $15.04 billion, according to FactSet.

LAST YEAR'S QUARTER: The Mooresville, N.C., company reported net income of 68 cents per share on revenue of $14.25 billion.

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