Lowe's sticks to annual forecasts, expects sales rebound

By Aishwarya Venugopal

(Reuters) - Home improvement retailer Lowe's stuck to its annual financial targets, brushing aside lower-than-expected quarterly same-store sales that were hurt by cold weather, driving its shares up 10 percent on Wednesday.

A prolonged winter in some U.S. states hit demand for outdoor products at Lowe's in the February-April period, but the company was optimistic about making up for lost business.

"We are anticipating recovering the majority of the sales miss in the first quarter ... So that's what we factored in to maintain our guidance," Chief Financial Officer Marshall Croom said on a conference call with analysts.

Many U.S. retailers have said that a late start to the spring shopping season has weighed on sales of lawn-mowers, patio furniture and other seasonal products.

Still, Lowe's Chief Executive Officer Robert Niblock said the company was already seeing a double-digit increase in same-store sales for May.

"Thankfully, as the season has begun to spike over the past couple of weeks, we believe we've had the staff in place to take advantage," Chief Operating Officer Richard Maltsbarger said.

Shares of Lowe's, the No. 2 U.S. home improvement chain, jumped 9.5 percent to $93.92.

Sales at Lowe's stores open at least a year rose 0.6 percent in the three months ended May 4, while analysts on average had expected a 3.06 percent increase, according to Thomson Reuters I/B/E/S.

"While certainly a touch disappointing, (Lowe's report) wasn't a big surprise to us. We believe most of the (comparable-store sales) pressure to be more transitory in nature than structural," Gordon Haskett analyst Chuck Grom said.

Like Lowe's, its bigger rival Home Depot Inc last week blamed cold weather for missing Wall Street estimates on same-store sales.

Lowe's maintained its annual forecast for profit and same-store sales, while slightly raising its estimate for sales growth to reflect an accounting change.

The company's net income rose to $988 million or $1.19 per share in the quarter, while sales rose nearly 3 percent to $17.36 billion. Analysts had expected earnings of $1.22 per share and revenue of $17.46 billion.

On Tuesday, Lowe's said current J.C. Penney CEO Marvin Ellison would be taking over at Lowe's, replacing Niblock, who held the position for 13 years.

Bob Phibbs, CEO of consultancy firm Retail Doctor, said the change in leadership was good news for the Mooresville, North Carolina-headquartered retailer.

"New leadership at Lowe's needs to focus on getting customers to their stores - in all weather conditions," he added.

(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sai Sachin Ravikumar)