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Lowe's 1st-Qtr results rise but miss analysts' estimates; raises full-year earnings forecast

This March 25, 2014 photo shows a Lowe's store in Philadelphia. Lowe's Cos. reports quarterly earnings on Wednesday, May 21, 2014. (AP Photo/Matt Rourke)

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This March 25, 2014 photo shows a Lowe's store in Philadelphia. Lowe's Cos. reports quarterly earnings on Wednesday, May 21, 2014. (AP Photo/Matt Rourke)

MOORESVILLE, N.C. - Home-improvement retailer Lowe's fiscal first-quarter net income climbed 16 per cent, bolstered in part by a lower tax rate.

But its revenue and its profit adjusted to exclude the effect of one-time items missed analysts' estimates as poor weather kept customers from stores during the beginning of the key spring selling season.

Nonetheless, the company raised its full-year earnings forecast on Wednesday.

Spring is the most important season for home improvement retailers as Americans start spending more on outdoor projects. But a wet and cold spring has put a damper on shoppers starting on yard and garden products. On Tuesday Lowe's larger rival Home Depot Inc. also said bad weather hurt its first-quarter results.

"We executed well during the quarter, despite an unexpectedly prolonged winter in many areas of the country," Lowe's CEO Robert Niblock said.

Niblock said in a statement that unfavourable weather conditions lowered traffic and hurt the sales of products in its exterior categories — like patio and gardening goods. But he added that results for indoor categories — such as plumbing parts and indoor paints — were solid.

Niblock also said that results have gotten better in May.

Lowe's shares fell 27 cents to $45.25 in midday trading. The stock is down about 8 per cent since the beginning of the year.

For the three months ended May 2, Lowe's Cos. earned $624 million, or 61 cents per share. A year ago the Mooresville, North Carolina, company earned $540 million, or 49 cents per share.

The lower tax rate added 4 cents per share to the latest quarter's earnings, while asset impairment charges reduced earnings by 1 cent.

Excluding these items, earnings were 58 cents per share.

Analysts polled by FactSet forecast earnings of 60 cents per share.

Revenue rose 2 per cent to $13.4 billion from $13.09 billion, but still fell short of Wall Street's prediction of $13.89 billion.

Going forward, Lowe's now sees fiscal 2014 earnings of about $2.63 per share. Its prior guidance was for earnings of about $2.60 per share. Revenue is still expected to rise by approximately 5 per cent. Based on fiscal 2013's revenue of $53.42 billion, that implies about $56.1 billion.

Analysts expect full-year earnings of $2.62 per share on revenue of $56.03 billion.

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