Lowe's Reports First Quarter Sales and Earnings Results

Lowe's Reports First Quarter Sales and Earnings Results

-- First Quarter Comparable Store Sales Increased 2.4 Percent--

MOORESVILLE, N.C.--(BUSINESS WIRE)-- Lowe's Companies, Inc. (NYSE:LOW), the world's second largest home improvement retailer, today reported net earnings of $489 million for the quarter ended April 30, 2010, a 2.7 percent increase from the same period a year ago. Diluted earnings per share increased 6.3 percent to $0.34 from $0.32 in the first quarter of 2009.

Sales for the quarter increased 4.7 percent to $12.4 billion, up from $11.8 billion in the first quarter of 2009. Comparable store sales for the first quarter increased 2.4 percent.

"Consumers are showing signs of reengagement in home improvement, including discretionary projects and purchases of bigger ticket products, which had taken a back seat during the worst of the economic downturn," commented Robert A. Niblock, Lowe's chairman and CEO. "This, combined with the government stimulus programs and favorable weather in March and April, drove solid quarterly sales and earnings that exceeded our guidance.

"While we are optimistic we will experience solid demand through the balance of the year, we view 2010 as a year of transition for our industry. We remain confident that our commitment to providing excellent customer service, combined with great merchandising, will drive profitable sales and market share growth."

During the quarter, Lowe's opened 11 stores. As of April 30, 2010, Lowe's operated 1,721 stores in the United States, Canada and Mexico representing 194.3 million square feet of retail selling space, a 2.9 percent increase over last year.

A conference call to discuss first quarter 2010 operating results is scheduled for today (Monday, May 17) at 9:00 am EDT. The conference call will be available through a webcast and can be accessed by visiting Lowe's website at www.Lowes.com/investor and clicking on Lowe's First Quarter 2010 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until August 15, 2010.

Lowe's Business Outlook

Second Quarter 2010 (comparisons to second quarter 2009)

    --  The company expects to open approximately 4 new stores reflecting square
        footage growth of approximately 2 percent
    --  Total sales are expected to increase 5 to 7 percent
    --  The company expects comparable store sales to increase 2 to 4 percent
    --  Earnings before interest and taxes as a percentage of sales (operating
        margin) is expected to increase approximately 40 basis points
    --  Depreciation expense is expected to be approximately $400 million
    --  Diluted earnings per share of $0.57 to $0.59 are expected
    --  Lowe's second quarter ends on July 30, 2010 with operating results to be
        publicly released on Monday, August 16, 2010

Fiscal Year 2010 (comparisons to fiscal year 2009)

    --  The company expects to open 40 to 45 stores in 2010 reflecting total
        square footage growth of approximately 2 percent
    --  Total sales are expected to increase 5 to 7 percent
    --  The company expects comparable store sales to increase 2 to 4 percent
    --  Earnings before interest and taxes as a percentage of sales (operating
        margin) is expected to increase approximately 60 basis points
    --  Depreciation expense is expected to be approximately $1.60 billion
    --  Diluted earnings per share of $1.37 to $1.47 are expected for the fiscal
        year ending January 28, 2011

Disclosure Regarding Forward-Looking Statements

This news release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the company's expectations for sales growth, comparable store sales, earnings and performance, capital expenditures, store openings, the housing market, the home improvement industry, demand for services, share repurchases and any statement of an assumption underlying any of the foregoing, constitute "forward-looking statements" under the Act. Although the company believes that the expectations, opinions, projections, beliefs and other similar expressions reflected in its forward-looking statements are reasonable, it can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results expressed or implied by our forward-looking statements including, but not limited to, changes in general economic conditions, such as continued high rates of unemployment, interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability and increasing regulation of consumer credit and of mortgage financing, inflation or deflation of commodity prices and other factors which can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as the psychological effects of falling home prices, and in the level of repairs, remodeling, and additions to existing homes, as well as a general reduction in commercial building activity; (ii) secure, develop, and otherwise implement new technologies and processes designed to enhance our efficiency and competitiveness; (iii) attract, train, and retain highly-qualified associates; (iv) locate, secure, and successfully develop new sites for store development particularly in major metropolitan markets; (v) respond to fluctuations in the prices and availability of services, supplies, and products; (vi) respond to the growth and impact of competition; (vii) address changes in existing or new laws or regulations that affect employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax or environmental issues; and (viii) respond to unanticipated weather conditions that could adversely affect sales. In addition, we could experience additional impairment losses if the actual results of our operating stores are not consistent with the assumptions and judgments we have made in estimating future cash flows and determining asset fair values. For more information about these and other risks and uncertainties that we are exposed to, you should read the "Risk Factors" and "Critical Accounting Policies and Estimates" included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission (the "SEC") and the description of material changes, if any, therein included in our Quarterly Reports on Form 10-Q.

The forward-looking statements contained in this news release are based upon data available as of the date of this release or other specified date and speak only as of such date. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf about any of the matters covered in this release are qualified by these cautionary statements and the "Risk Factors" and other information included in our periodic reports filed with the SEC. We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, change in circumstances, future events, or otherwise.

With fiscal year 2009 sales of $47.2 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 15 million customers a week at more than 1,700 home improvement stores in North America. Founded in 1946 and based in Mooresville, N.C., Lowe's is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.

 

Lowe's Companies, Inc.

Consolidated Statements of Current and Retained
Earnings (Unaudited)

In Millions, Except Per Share Data

                                       Three Months Ended

                                       April 30, 2010          May 1, 2009

Current Earnings                       Amount       Percent    Amount    Percent

Net sales                            $ 12,388       100.00   $ 11,832    100.00

Cost of sales                          8,030        64.82      7,636     64.54

Gross margin                           4,358        35.18      4,196     35.46

Expenses:

Selling, general and                   3,093        24.98      2,957     24.99
administrative

Depreciation                           397          3.20       401       3.39

Interest - net                         82           0.66       78        0.66

Total expenses                         3,572        28.84      3,436     29.04

Pre-tax earnings                       786          6.34       760       6.42

Income tax provision                   297          2.39       284       2.40

Net earnings                         $ 489          3.95     $ 476       4.02

Weighted average common shares         1,438                   1,462
outstanding - basic

Basic earnings per common share      $ 0.34                  $ 0.32

Weighted average common shares         1,441                   1,464
outstanding - diluted

Diluted earnings per common share    $ 0.34                  $ 0.32

Cash dividends per share             $ 0.090                 $ 0.085

Retained Earnings

Balance at beginning of period       $ 18,307                $ 17,049

Net earnings                           489                     476

Cash dividends                         (130   )                (126   )

Share repurchases                      (420   )                -

Balance at end of period             $ 18,246                $ 17,399



 

Lowe's Companies,
Inc.

Consolidated
Balance Sheets

In Millions, Except
Par Value Data

                             (Unaudited)        (Unaudited)

                             April 30, 2010     May 1, 2009     January 29, 2010

Assets

Current assets:

Cash and cash              $ 2,677            $ 682           $ 632
equivalents

Short-term                   675                460             425
investments

Merchandise                  9,899              9,013           8,249
inventory - net

Deferred income              202                122             208
taxes - net

Other current                242                264             218
assets

Total current                13,695             10,541          9,732
assets

Property, less
accumulated                  22,379             22,715          22,499
depreciation

Long-term                    832                448             277
investments

Other assets                 508                444             497

Total assets               $ 37,414           $ 34,148        $ 33,005

Liabilities and
Shareholders'
Equity

Current
liabilities:

Current maturities         $ 536              $ 52            $ 552
of long-term debt

Accounts payable             7,062              5,843           4,287

Accrued
compensation and             594                535             577
employee benefits

Deferred revenue             901                741             683

Other current                1,788              1,564           1,256
liabilities

Total current                10,881             8,735           7,355
liabilities

Long-term debt,
excluding current            5,531              5,023           4,528
maturities

Deferred income              521                533             598
taxes - net

Other liabilities            1,462              1,420           1,455

Total liabilities            18,395             15,711          13,936

Shareholders'
equity:

Preferred stock -
$5 par value, none           -                  -               -
issued

Common stock - $.50
par value;

Shares issued and
outstanding

April 30, 2010      1,443

May 1, 2009         1,474

January 29, 2010    1,459    722                737             729

Capital in excess            6                  296             6
of par value

Retained earnings            18,246             17,399          18,307

Accumulated other
comprehensive                45                 5               27
income

Total shareholders'          19,019             18,437          19,069
equity

Total liabilities
and shareholders'          $ 37,414           $ 34,148        $ 33,005
equity



 

Lowe's Companies, Inc.

Consolidated Statements of Cash Flows
(Unaudited)

In Millions

                                                    Three Months Ended

                                                    April 30, 2010   May 1, 2009

Cash flows from operating activities:

Net earnings                                        $ 489            $ 476

Adjustments to reconcile net earnings to
net cash

provided by operating activities:

Depreciation and amortization                         424              434

Deferred income taxes                                 (82    )         (83    )

Loss on property and other assets - net               1                9

Share-based payment expense                           26               24

Net changes in operating assets and
liabilities:

Merchandise inventory - net                           (1,644 )         (801   )

Other operating assets                                (35    )         (1     )

Accounts payable                                      2,773            1,732

Other operating liabilities                           784              555

Net cash provided by operating activities             2,736            2,345

Cash flows from investing activities:

Purchases of short-term investments                   (426   )         (68    )

Proceeds from sale/maturity of short-term             228              122
investments

Purchases of long-term investments                    (745   )         (302   )

Proceeds from sale/maturity of long-term              138              6
investments

(Increase) decrease in other long-term                (1     )         15
assets

Property acquired                                     (283   )         (572   )

Proceeds from sale of property and other              5                11
long-term assets

Net cash used in investing activities                 (1,084 )         (788   )

Cash flows from financing activities:

Net decrease in short-term borrowings                 -                (986   )

Proceeds from issuance of long-term debt              992              -

Repayment of long-term debt                           (25    )         (8     )

Proceeds from issuance of common stock from stock     20               1
options exercised

Cash dividend payments                                (131   )         (126   )

Repurchase of common stock                            (465   )         -

Net cash provided by (used in) financing              391              (1,119 )
activities

Effect of exchange rate changes on cash               2                (1     )

Net increase in cash and cash equivalents             2,045            437

Cash and cash equivalents, beginning of               632              245
period

Cash and cash equivalents, end of period            $ 2,677          $ 682



 

 


    Source: Lowe's Companies, Inc.