(Reuters) - Home improvement chain Lowe's Cos Inc (LOW.N) reported an increase in quarterly comparable sales that paled in comparison to those of rival Home Depot Inc (HD.N), despite beating Wall Street expectations.
Shares of Lowe's fell as much as 4.5 percent on Wednesday. Home Depot was off about 1 percent amid declines in the broader market.
Home Depot and Lowe's are benefiting from pent-up demand for houses in the United States after the 2008 financial crisis, while low interest rates and growth in jobs, wages and credit have spurred spending on big-ticket projects such as home remodeling.
Although fourth-quarter sales at Lowe's U.S. stores open for more than a year rose a healthy 5.5 percent, the increase was less than the 8.9 percent reported by Home Depot a day earlier.
Lowe's also said on Wednesday that it expected 2016 sales to rise 6 percent, higher than the 4.8 percent that analysts were expecting and matching Home Depot's forecast.
"As good as (Lowe's) numbers are, comparisons will inevitably be drawn with Home Depot's much stronger results," said Hakon Helgesen, analyst at research firm Conlumino.
"This takes the shine off (Lowe's) figures as it indicates that Home Depot is adding market share at a faster pace than Lowe's."
Besides an improving housing market, unseasonably warm weather in the holiday quarter encouraged customers to continue outdoor activities and home renovations for longer than usual.
Analysts say Home Depot, which operates 2,274 stores worldwide compared with Lowe's 1,857 stores, enjoys a stronger brand image and remains more of a "go-to" destination for renovation items.
For example, kitchen products, typically a big ticket item, performed well for Home Depot during the quarter, but for Lowe's the business was "below average".
Chief Executive Robert Niblock blamed that weakness on a shift in marketing strategy that pulled promotions into October, instead of their usual start in November.
Overall, Lowe's same-store sales rose a better-than-expected 5.2 percent in the three months ended Jan. 29.
The company's net earnings plunged to $11 million from $450 million, hurt by a $530 million impairment charge related to its exit from a joint venture in Australia.
Excluding items, it earned 59 cents per share, in-line with Wall Street's expectations, according to Thomson Reuters I/B/E/S.
Net sales rose 5.6 percent to $13.24 billion, beat analysts' estimates of $13.07 billion.
Lowe's shares were down 2.4 percent at $66.27 in late morning trading.
Reporting by Yashaswini Swamynathan and Siddharth Cavale in Bengaluru; Editing by Robin Paxton and Savio D'Souza