(adds preview of fiscal 2010)
DOW JONES NEWSWIRES
Home builder Lennar Corp.'s (LEN) fiscal third-quarter loss
widened amid charges as home sales remained weak, but the company
said it could return to profitability in fiscal 2010 it the economy
continues to stabilize.
There are signs that the sector is recovering from its worst
downturn in decades. Customers are returning to the market, lured
by fallen home prices, low mortgage rates and a federal tax credit
for qualified first-time buyers. But rising foreclosures, rising
unemployment and tight credit still pose challenges. The federal
credit expires Nov. 30, and without an extension, the market could
soften.
Even so, Lennar - one of the U.S.'s largest home builders - has
increased the number of home starts, reduced the number of homes in
inventory and repositioned itself toward first-time and
value-focused buyers.
For the quarter ended Aug. 9, Miami-based Lennar posted a loss
of $171.6 million, or 97 cents a share, compared with a prior-year
loss of $89 million, or 56 cents a share. The latest period
included 76 cents in charges. Revenue decreased 35% to $721
million. Analysts polled by Thomson Reuters most recently were
looking for a 46-cent loss on revenue of $774 million.
Gross margin on home sales, a barometer of efficiency, slipped
to 15.6% from 18%.
Orders fell 8% from a year earlier, but the company said it was
the smallest such decline in nearly three years. Sequentially,
orders rose each month. The builder ended the quarter with its
highest backlog since August 2008, a positive sign for the future
if the deals close.
Deliveries declined 29% from a year earlier, while the
cancellation rate fell to 19% from 27%, as fewer buyers abandoned
contracts.
Shares closed at $16.54 on Friday and didn't trade premarket.
The stock is up 90% this year.
-By Tess Stynes and Dawn Wotapka, Dow Jones Newswires;
212-416-2481; tess.stynes@dowjones.com