Lowe's profit tops view

By Aarthi Sivaraman

NEW YORK (Reuters) - Lowe's Cos Inc 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 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.

"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 January 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.