Lowe's Cos., the second-largest home- improvement retailer, said first-quarter profit fell 18 percent and forecast more declines for the year after the worst U.S. housing slump in more than 25 years slowed spending on remodeling.
Lowe's dropped 2.9 percent before the start of New York Stock Exchange composite trading.
Net income decreased to $607 million, or 41 cents a share, from $739 million, or 48 cents, a year earlier, Mooresville, North Carolina-based Lowe's said today in a statement. Sales declined 1.3 percent to $12 billion.
``The industry is still feeling the effects of a significant drop in existing home sales,'' Chris Horvers, an analyst with Bear Stearns & Co., wrote in a research note May 16.
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Sales of previously owned homes, which account for about 85 percent of the housing market, fell in March, the seventh decline in eight months. Purchases of existing houses trigger home-improvement spending as owners prepare for a sale and buyers paint or remodel after moving in.
I've been consistent in my statements about the housing market. Short version:
1.) Inventory is sky high.
2.) The high foreclosure rate will add to that inventory.
3.) Consumers are already heavily indebted, meaning they can't take on much more debt to buy a house, and
4.) Consumer confidence is already really, meaning people don't want to take on a large purchase right now.
