by Calculated Risk on 2/25/2008 09:19:00 AM

From the WSJ: Lowe's Posts Lower Net Amid Housing Downturn

Lowe's Cos.'s fiscal fourth-quarter net income slumped 33% on continued sales weakness, which the home-improvement retailer expected to persist for several more quarters.

... same-store sales declined 7.6%.

Chairman and Chief Executive Robert A. Niblock said sales were below expectations "as we faced an unprecedented decline in housing turnover, falling home prices in many areas and turbulent mortgage markets that impacted both sentiment related to home improvement purchases as well as consumers' access to capital."

He went on to say "the next several quarters will be challenging on many fronts as industry sales are likely to remain soft."

In an earlier post, I noted that real home improvement spending had held up pretty well.

This graph shows the major components of residential investment (RI) normalized by GDP.

Click on graph for larger image.

The largest component of RI is investment in new single family structures. This includes both homes built for sale, and homes built by owner.

The second largest component of RI is home improvement. This investment could be seriously impacted by declining mortgage equity withdrawal (MEW) over the next few quarters.

This data is from the Bureau of Economic Analysis (BEA), supplemental tables. (see Section 5: Table 5.4.5AU. Private Fixed Investment in Structures by Type, near the bottom).