UPDATE 4-Lowe's profit tops view; sees signs of life

* Q1 EPS $0.32 versus Wall St $0.25 view

* Q1 sales down 1.5 percent to $11.83 bln

* Raises FY EPS view to $1.13-$1.25; Wall St view $1.11

* Sees some positive signs

* Lowe's shares up 9.1 pct, Home Depot's up 6.7 pct
(Adds company, analyst comments, byline)

By Aarthi Sivaraman

NEW YORK, May 18 (Reuters) - Lowe's Cos Inc (LOW.N: Quote, Profile, Research) posted
better-than-expected quarterly profit on Monday as it saw some
strength in outdoor projects like gardens and lawns in the
spring, even as consumers still shunned big home renovations.

The No. 2 U.S. home improvement retailer behind Home Depot
Inc (HD.N: Quote, Profile, Research) also raised its full-year forecast as it saw some
signs that the decline in the housing market may be ebbing and
consumer confidence may be improving.

California and Florida -- among the worst-hit in the U.S.
housing slump -- were still facing deep declines in same-store
sales, but the drop was not as bad as in prior quarters, Chief
Executive Robert Niblock said in an interview. [ID:nN18353543]

"There have been some encouraging signs in recent weeks that
suggest perhaps the worst is behind us," Niblock told analysts
on a conference call.

Shares of Lowe's were up more than 9 percent, while Home
Depot, which reports earnings on Tuesday, rose nearly 7
percent.

Though there are positive signs, Lowe's will remain
conservative with its plans since many economic indicators are
still near "historic lows, Niblock said.

For instance, job losses continue to be high, Niblock said,
adding that he expects unemployment to increase in the second
half of the year.

For the full year ending Jan. 29, Lowe's now expects to earn
$1.13 to $1.25 per share. It had previously expected earnings of
$1.04 to $1.20 per share.

Analysts looked for Lowe's to earn $1.11 per share.

"We are in a fragile state but there are more positive
things to look toward today than we had six months or even a
year ago," said Jefferies & Co analyst Daniel Binder. "It's
still all about things being less bad."

Lowe's view on the economic environment "bodes well for
tomorrow's (Home Depot) results and the outlook for the
remainder of 2009," Credit Suisse analyst Gary Balter wrote in
a research note.

"(Its) results should also help put to bed some investor
concerns that the company was mis-executing after a
(fourth-quarter) characterized by excess inventory and
subsequent markdowns," Balter said of Lowe's.

DO-IT-YOURSELF

Lowe's net profit fell to $476 million, or 32 cents a share,
for the first quarter ended May 1, from $607 million, or 41
cents a share, a year earlier.

Analysts on average had expected a profit of 25 cents per
share, according to Reuters Estimates.

Sales fell 1.5 percent to $11.83 billion. Sales at stores
open at least a year fell 6.6 percent in the quarter.

Outdoor products, which make up 35 percent of Lowe's sales,
reported vastly stronger same-store sales than its indoor
products such as kitchen and flooring items, the company said.

Consumers also took up more "do-it-yourself" home projects
such as painting, instead of paying someone else to do it, as
they tried to save money in the recession, CEO Niblock said.

For the second quarter, Lowe's said it expects to earn 51
to 55 cents per share, on a sales decline of 2 percent to an
increase of 1 percent.

Analysts expect earnings of 50 cents a share.

Lowe's also said it still expects to open 60 to 70 stores
in the year.

Lowe's also revised full-year sales plans to a range of a
decline of 2 percent to an increase of 1 percent. Previously,
it had expected the higher end to be an increase of 2 percent.

Same-store sales are still expected to decline 4 to 8
percent for the year.

Its shares were up $1.67 or 9.1 percent at $20.12, off an
earlier high at $20.65, on the New York Stock Exchange on Monday
afternoon. Shares of Home Depot were up $1.64 or 6.7 percent at
$26.04.
(Reporting by Aarthi Sivaraman; Editing by Gerald E. McCormick,
Brian Moss and Matthew Lewis)