Lowe’s plans to build 135 to 145 new stores
At its annual analyst and investor conference in Charlotte, N.C., Lowe’s made few predictions about when the housing crisis will end but told those gathered that it will continue to shore up sales programs and forge ahead with expansion plans.
The company reported that it plans to open 135 to 145 stores in 2008, and that it will continue to grow areas like installed sales — part of the Do It For Me (DIFM) category — as well as special order, commercial and Internet sales.
CEO Robert Niblock said that while housing pressures have had a regional impact on Lowe’s business, credit market woes are affecting home improvement customers nationwide. “Therefore, the sales environment is challenging as consumers hesitate on larger discretionary projects,” he said.
At the same time, Niblock said, the average ticket at a Lowe’s store was $68.31 for the second quarter, down only $1.50 from the same period in 2006.
The conference came a day after Lowe’s had issued a warning that it will hit the low end or go slightly below its fiscal year earnings projections.
The company predicts earnings of $1.97 to $2.01 per share. From 2008 to 2010, the company said it expects earnings growth of 12 percent to 15 percent per year and sales growth of 8 percent to 11 percent per year.
“External pressures weigh on our near-term performance, but looking past the current cycle, we see many opportunities for continued sales and earnings growth and increasing cash flow from operations,” said Robert Hull, executive vp and CFO in a statement. “The current pressures will likely continue into 2008, so we expect our earnings performance to improve from mid-single digit growth in 2008 to high-teens in 2010.”
The company cited drought conditions in the Western, Southeastern and Mid-Atlantic regions for the lower earnings, saying the poor conditions hurt sales in the outdoor segment.
Weyerhaeuser to buy sawmill in Oklahoma
Federal Way, Wash.-based Weyerhaeuser said it will buy an Idabel, Okla.-based sawmill from Freeman Brothers, parent of Bibler Brothers Lumber.
Terms of the deal were not disclosed.
The sawmill currently operates as a chip supplier for Weyerhaeuser’s Valliant, Okla.-based containerboard mill.
The mill is capable of producing up to 130 million board feet of lumber per year.
NAR: Existing-home sales drop for sixth straight month
Existing-home sales — including homes, condos and co-ops — fell in August for the sixth straight month to a seasonally adjusted annual rate of 5.5 million units in August from a level of 5.75 million in July, a drop of 4.3 percent. That rate is 12.8 percent below the 6.31 million-unit pace last year, according to the National Association of Realtors.
Lawrence Yun, NAR senior economist, said the decline was expected, especially following “unusual” disruptions in the mortgage market. Those disruptions included a significant rise in rates for jumbo loans and a higher number of canceled or postponed sales.
“Lower sales contributed to a buildup of unsold inventory,” Yun said. “Once we get through these disruptions, we’ll get a better sense of where the actual market is in late fall as conditions begin to normalize.”
Total housing inventory rose 0.4 percent at the end of August to 4.58 million existing homes available for sale, which represents a 10-month supply at the current sales pace, up from a 9.5-month supply in July.
The national median existing-home price for all housing types was $224,500 in August, up 0.2 percent from August 2006 when the median was $224,000.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.57 percent in August, down from 6.7 percent in July; the rate was 6.52 percent in August 2006.
Last week, Freddie Mac reported the 30-year fixed rate was down to 6.34 percent.
Single-family home sales fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in August from a pace of 5 million in July, and are 13.0 percent below the 5.53 million-unit level in August 2006.
Existing condominium and co-op sales dropped 8 percent to a seasonally adjusted annual rate of 690,000 units in August from 750,000 in July, and are 11.7 percent lower than the 781,000-unit pace a year ago. The median existing condo price was $228,500 in August, up 2.1 percent from August 2006.
Regionally, existing-home sales in the Northeast slipped 2 percent in August to an annual pace of 1 million, 5.7 percent below a year ago. The median price in the Northeast was $282,300, up 3.6 percent from August 2006.
Existing-home sales in the South fell 2.7 percent to a level of 2.2 million in August, and are 12.7 percent lower than August 2006. The median existing-home price in the South was $183,500, down 0.7 percent from a year ago.
Existing-home sales in the Midwest fell 5.2 percent to an annual rate of 1.28 million in August, and are 10.5 percent below a year ago. The median price in the Midwest was $177,100, up 3.1 percent from August 2006.
Existing-home sales in the West dropped 9.8 percent in August to a level of 1.01 million, and are 21.7 percent below August 2006. The median price in the West was $332,300, which is 3.8 percent below a year ago.