Lowe's Cos. Inc. reported a 7.9 percent decline in second-quarter profit on Monday, but still topped Wall Street expectations as the nation's second-largest home improvement retailer benefited from tight expense controls and the government stimulus checks. The company offered a downbeat outlook for the third quarter, however, as it faces a weak housing market that shows no signs of recovery. Its shares rose 50 cents, or 2 percent, to $25 in premarket trading.

The Mooresville, N.C.-based Lowe's earned $938 million, or 64 cents per share, in the three months ended Aug. 1, down from $1.02 billion, or 67 cents per share, in the year-ago period.

It said sales increased 2.4 percent to $14.5 billion from $14.17 billion a year ago.

Analysts surveyed by Thomson Reuters expected a smaller profit of 56 cents per share on lower revenue of $14.1 billion.

"Our sales results for the quarter, while better than our forecast, reflect the realities of the continuing macro economic pressures on our industry," said Robert A. Niblock, chairman and CEO, in a statement. He added that Lowe's experienced "relative" strength in seasonal sales as homeowners restored lawns and did outdoor landscaping following the effects of last year's drought in much of the country. He also said the company benefited from the economic impact of the fiscal stimulus checks.

However, Niblock added that weakness in bigger ticket items continues, particularly in markets hurt most by the housing downturn.

Amid such economic uncertainty, Lowe's said that it expects earnings per share to be in the range of 27 cents to 31 cents in the fiscal third quarter which ends Oct. 31. Thomson Reuters says analysts were expecting 33 cents a share.

The company expects total sales to increase a modest 1 to 2 percent for the quarter while same-store sales, or sales at stores open at least a year, should fall 5 to 7 percent. Same-store sales are considered a key indicator of a retailer's health.

For the fiscal year, the company expects earnings per share to be in the range of $1.48 to $1.56 per share. Thomson Reuters says analysts were looking for $1.50 a share for the year

Total sales are expected to be up 1 percent and the company predicts same-store sales to fall 6 to 7 percent for the year.

Lowe's is second to The Home Depot Inc. among the U.S. home improvement retailers. Home Depot reports its earnings on Tuesday.

Written By ANNE D'INNOCENZIO

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