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Aug 23 (Reuters) - U.S. home improvement retailer Lowe’s Companies Inc reported lower-than-expected quarterly earnings and slashed its forecast for profit margins, as it spends more on marketing and longer employee shifts to boost sales.
Lowe’s shares dipped 5.1 percent to $71.91 in premarket trading on Wednesday.
The company said it now expects operating margin to rise 80 to 100 basis points in the year ending Feb. 2, down from an earlier forecast for a 120-basis-point increase.
Lowe’s investments to drive sales include “amplifying our consumer messaging and incremental customer-facing hours in our stores,” Chief Executive Robert Niblock said in a statement.
Mooresville, North Carolina-based Lowe’s results contrast with those of larger rival Home Depot Inc, which reported better-than-expected earnings last week, driven by higher consumer spending on home improvement.
Lowe’s net income rose to $1.42 billion, or $1.68 per share in the second quarter ended Aug. 4, from $1.17 billion, or $1.31 per share, a year earlier.
Excluding one-time items, the company earned $1.57 per share, missing analysts’ average estimate of $1.61, according to Thomson Reuters I/B/E/S.
Net sales climbed 6.8 percent to $19.50 billion. Analysts had expected $19.53 billion.
Sales at Lowe’s stores open for more than 12 months rose 4.5 percent, edging past the 4.3 percent expected by analysts on average, according to research firm Consensus Metrix. (Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sai Sachin Ravikumar)