Home Depot Inc., the largest U.S. home-improvement retailer, reports first-quarter earnings on Tuesday, and No. 2 Lowe's Cos. reports on Monday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Home-improvement companies have suffered amid a housing slump and consumers cutting back on renovations and discretionary spending as they face rising food and gas and tightening credit markets.
Lowe's, of Mooresville, N.C., said during the quarter it plans to delay the opening of about 20 new stores this year in several hard-hit markets, including California.
Home Depot, based in Atlanta, earlier this month said it would close 15 underperforming stores over the next two months, a move that will affect 1,300 employees. The company said it will still open 55 new stores in the 2009 fiscal year, but will no longer pursue the opening of roughly 50 U.S. stores that have been in its new store pipeline.
BY THE NUMBERS: Analysts polled by Thomson Financial expect Home Depot Inc. to report a profit of 37 cents per share on revenue of $17.62 billion.
Lowe's expects first-quarter total sales to rise about 2 percent, implying sales of $12.44 billion, on earnings of about 38 to 42 cents a share.
Analysts polled by Thomson Financial predict a profit of 40 cents per share on revenue of $12.37 billion.
ANALYST TAKE: Stifel Nicolaus & Co. analyst David A. Schick wrote in a note to reporters that comparisons with results from a year ago are easing, but the housing backdrop has worsened.
He expects Lowe's, which he rates "Hold," to report same-store sales, or sales in stores open at least one year, fell during the quarter. While Lowe's is outpacing many others in the retail, Schick wrote, the company's more conservative plan toward store openings, merchandising and expenses is "appropriate given the difficult housing market."
Meanwhile, he expects Home Depot, which he rates "Buy" to also say same-store sales fell, but added the company's improvement on its distribution network will help in the long run.
"Near-term it will be difficult to judge the progress/benefit of Home Depot's various upgrades as housing remains soft and the company laps years of over earning," Schick wrote.
WHATS AHEAD: Analysts are looking for any uptick in big-ticket item sales that might signal the beginning of a recovery.
STOCK PERFORMANCE: Home Depot shares rose 3 percent during its quarter beginning Feb. 4. Lowe's shares rose 2 percent during its quarter beginning Feb. 2.
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