The U.S. home improvement retailer had attempted to acquire Quebec-based Rona through a $1.8-billion deal but retreated in September in the face of staunch opposition from Rona's board and Quebec politicians.
With Rona's longtime chief executive stepping down recently and its second-largest shareholder calling for a new board, there's speculation that Lowe's could renew its bid for Canada's largest home-improvement chain.
Lowe's CEO Robert Niblock wouldn't talk about Rona specifically during a Monday conference call to discuss the company's third-quarter earnings.
But Niblock says while he's pleased with the performance of the 32 Lowe's stores in Canada, "we need more scale."
He said opening additional Lowe's stores and looking at other formats are part of the mix, but "we'll also continue to look at acquisitions as a potential way for expansion."
"We're going to evaluate all our options," Niblock said.
Lowe's Cos. reported before markets opened Monday that its third-quarter net income surged 76 per cent, helped by lower costs and higher revenue, as efforts to revamp its merchandise and prices appeared to be gaining traction.
Its adjusted earnings without charges and its revenue both beat Wall Street forecasts. Its shares were up about six per cent in afternoon trading on Monday afternoon.
Lowe's has been retooling its pricing strategy, and last summer returned to offering permanent low prices on many items across the store, instead of offering fleeting discounts.
But the changes have been slow to catch on, and last quarter Lowe's said it could take until the middle of next year to reap the benefits of the strategy.
"We are keenly focused on improving our core business," Niblock said Monday. "Our level of execution is improving and we delivered solid results in the third quarter."
Lowe's quarterly report, the first issued by the company since it backed away from trying to acquire Rona, is the latest indication that the companies are benefiting from the beginning of a rebound in the U.S. housing market.
Last week U.S. rival Home Depot Inc. reported slightly higher third-quarter net income and the company raised its full-year forecast.
Both Lowe's and Home Depot have stores in Canada but face competition from Rona Inc.,
Rona has a bigger Canadian retail network than either of the U.S. companies, although many of its locations are smaller than typical Lowe's or Home Depot big-box stores.
Home Depot also benefited from a surge in sales late in the quarter from Superstorm Sandy preparations. Lowe's did not point to any benefit from the storm in its earnings release.
Lowe's earned $396 million, or 35 cents per share, for the three months ended Nov. 2. That compares with $225 million, or 18 cents per share, a year ago.
The current quarter includes charges that lowered earnings by 5 cents per share. In the prior-year period, charges reduced earnings by 18 cents per share.
The adjusted earnings of 40 cents per share beat the 36 cents per share that analysts polled by FactSet predicted.
Lowe's revenue rose 2 per cent to $12.07 billion from $11.85 billion. That also beat Wall Street's estimate of $11.93 billion.
Shares of Lowe's gained $2.37, or 7.4 per cent, to $34.35 in morning trading after rising as high as $34.50 earlier in the session. That is its highest level since February 2007, according to FactSet.
Revenue at stores open at least a year, a key gauge of a retailer's health, increased 1.8 per cent. At its U.S. stores, the metric climbed by the same percentage rate. This figure excludes results from stores recently opened or closed.
For fiscal 2012, Lowe's still expected earnings of about $1.64 per share and revenue to be approximately the same as 2011's $50.21 billion. Analysts forecast earnings of $1.66 per share on revenue of $50.1 billion.
Lowe's Cos., which is based in Mooresville, N.C., has 1,750 stores in North America but only a small presence in Canada relative to Home Depot and the domestic market leader, Rona, which has been struggling to maintain growth.
Rona currently has nearly 30,000 employees and 830 locations under its banner, giving Rona a bigger reach in Canada than Home Depot or Lowe's. Home Depot has just 180 stores across Canada and Lowe's has about 31 Canadian locations.
— With files from The Associated Press