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Lowe's Profit Drop Is Not That Bad

If I am being honest, I would have thought this number would have been much worse... Lowe's (LOW), #2 behind Home Depot (HD) reported quarterly earnings came to $607 million, or 41 cents a diluted share, compared with $739 million, or 48 cents a share, a year earlier, a 14% decrease. Net sales dipped 1.3% to $12 billion, with same-store sales falling 8.4%.


I do not think anyone expected good results. These are poor but, here is the key: "With our offering of great products and exceptional service, Lowe's continued to gain market share in the quarter, and diligent expense control helped us achieve respectable earnings in spite of the headwinds facing the industry," Niblock said

"Continuing to gain market share". Housing will eventually turn and Lowe's is positioning itself through superior service and sensible balance sheet management to be ready to capitalize when it happens. Results will begin to look "less bad" as easier comps begin to come around this summer and into the fall and we will begin to get more of an apples to apples comparison for earnings based on housing levels.

Lowe's is getting a larger piece of a smaller pie. When that pie expands (it will), its piece will grow in excess of Home Depot's who inexplicably is still struggling with service issues and the hangover of promises made and not kept.
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