This morning, Lowe’s Companies Inc. (LOW) backed its fiscal 2009 sales and earnings guidance, provided on August 17. The company maintains its earnings expectations between $1.13 and $1.21 for the fiscal year ending January 29, 2010.

Lowe’s expects total sales to decline about 3% from the previous year, while sales at established stores (same-store sales) are expected to decline between 7% and 9%. The company further stated that it might recognize impairments related to operating stores of up to $100 million during the second half due to uncertainty regarding an economic recovery.

For fiscal 2010, the company expects earnings per share to lie between $1.24 and $1.34. Total sales are expected to increase approximately 3% to 4%, with a comparable-store sales increase of approximately 1%.

As a reminder, Lowe’s – the second biggest U.S. home improvement retailer behind Home Depot Inc (HD) – announced last month  that it expected the North American market to start recovering in the first quarter of 2010 after a U.S. housing slump compelled homebuilders and consumers to put off major renovations and related purchases.
 
In central Milwaukee, Lowe’s decided to shut down an unprofitable store that has struggled since commencement in 2005, with sales failing to pick up. However,  the company intends to open between 62 and 66 stores in 2009. This reflects a growth of approximately 4% in total square footage. Store opening costs are expected to be about $50 million.  In fiscal 2010, the company intends to open between 35 and 45 stores. This reflects approximately a 2%-2.5% growth in total square footage. Store opening costs are expected to be approximately $30 million.

We note that the company reported a 19% decrease in second-quarter profit, as sales dropped over 5% due to weak consumer sentiment, unseasonable weather and restrained customer spending. The uncertain economic situation compelled the company to scale back its store expansion plans for 2010. Lowe’s stated that growth would be driven by prudent store expansion in underserved markets, both domestic and international.

The recent foray of Lowe’s beyond North America came through a joint venture with Woolworths Ltd., the largest retailer in Australia. Lowe’s is the second large U.S. retailer to expand into the Australian market this year, after Costco Wholesale Corporation (COST) opened its first store in Melbourne.
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