(Reuters) - Lowe's Cos joined rival Home Depot ( HD ) in forecasting lackluster annual sales and profit on Wednesday, signaling that a downturn in the home improvement sector would linger amid higher interest rates.

Shares of the Mooresville, North Carolina-based retailer were up 3.5% in premarket trading as it reported a surprise rise in fourth-quarter same-store sales, helped by demand for water cans, generators and cleaning supplies after Hurricanes Helene and Milton last year.

The home improvement sector has witnessed a sharp slowdown over the last two years as high mortgage rates, rising home prices as well as refinancing costs stifled demand.

Lowe's forecast follows conservative projections from Walmart and Home Depot ( HD ) in recent days, which analysts said is a signal to keep expectations intact, given how early in the year it is.

U.S. consumer confidence deteriorated at its sharpest pace in three-and-a-half years in February, data on Tuesday showed, with Americans becoming more worried about the potential economic impact of President Donald Trump's policies.

Since taking office in January, Trump has promised tax cuts as well as broad tariffs on imports and is cracking down on illegal immigration, which could worsen the shortage of skilled labor in the U.S.

The retailer cited near-term pressure in do-it-yourself projects such as flooring as well as kitchen and bath remodeling, which make up about 70% of its annual revenue.

Despite diversifying their supply chains, home improvement retailers are exposed to tariffs on lumber and metal product imports from Canada. Imports of hardware, tools and other durable products such as appliances and home-related goods from China also affect them.

Lowe's has said it sources 40% of its goods, including its own private brands, internationally. Home Depot ( HD ), which sources about half its goods from outside North America, said a day earlier it was well placed to manage any impact from tariffs.

Lowe's expects full-year 2025 comparable sales to be flat to up 1% compared to analysts' estimate of a 1.13% rise, according to data compiled by LSEG.

It forecast earnings per share in the range of $12.15 to $12.40, compared to analysts' estimate of $12.49 per share.

The company reported a 0.2% rise in same-store sales for the quarter ended January 31, compared to analysts' average estimate of a 1.9% decline.

It earned $1.93 per share on an adjusted basis, above an estimate of $1.84 in profit.