-- Announces Closing of Seven Underperforming Stores --
Included in the above reported results, the company recognized a charge related to an evaluation of the carrying value of long-lived assets, including seven stores that closed on
Sales for the quarter increased 1.3 percent to
"Despite some recovery in our seasonal business, our performance for the quarter fell short of our expectations," commented
"I would like to thank our hard working employees for their ongoing dedication and customer focus. I am also pleased to announce that our
During the quarter, Lowe's opened two stores. As of
A conference call to discuss second quarter 2011 operating results is scheduled for today (
Lowe's Business Outlook
Third Quarter 2011 (comparisons to third quarter 2010)
-- Total sales are expected to increase approximately 2 percent
-- The company expects comparable store sales to be approximately flat
-- The company expects average square footage growth of approximately 1.3
percent
-- Earnings before interest and taxes as a percentage of sales (operating
margin) are expected to decrease 10 to 20 basis points, which includes
20 to 30 basis points impact from additional expenses associated with
seven stores that closed August 14
-- Depreciation expense is expected to be approximately $370 million
-- Diluted earnings per share of $0.30 to $0.33 are expected, which
includes $0.01 to $0.02 per share impact from additional expenses
associated with seven stores that closed August 14
-- Lowe's third quarter ends on October 28, 2011 with operating results to
be publicly released on Monday, November 14, 2011
Fiscal Year 2011 - a 53-week Year (comparisons to fiscal year 2010 - a 52-week year)
-- Total sales are expected to increase approximately 2 percent, including
the 53rd week
-- The 53rd week is expected to increase total sales by approximately 1.4
percent
-- The company expects comparable store sales to decline approximately 1
percent
-- The company expects to open approximately 25 stores in 2011 reflecting
average square footage growth of approximately 1.3 percent
-- Earnings before interest and taxes as a percentage of sales (operating
margin) are expected to decrease approximately 30 basis points, which
includes approximately 25 basis points impact from impairment and store
closing costs
-- Depreciation expense is expected to be approximately $1.5 billion
-- Diluted earnings per share of $1.48 to $1.54 are expected for the fiscal
year ending February 3, 2012 , which includes approximately $0.06 per
share impact from impairment and store closing costs
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, and comments 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 consumer credit, 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
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 in the "Risk Factors" included in our Annual Report on Form 10-K to the
With fiscal year 2010 sales of
Lowe's Companies, Inc. Consolidated Statements of Current and Retained Earnings (Unaudited) In Millions, Except Per Share Data Three Months Ended Six Months Ended July 29, 2011 July 30, 2010 July 29, 2011 July 30, 2010 Current Amount Percent Amount Percent Amount Percent Amount Percent Earnings Net sales$ 14,543 100.00$ 14,361 100.00$ 26,728 100.00$ 26,749 100.00 Cost of sales 9,527 65.51 9,355 65.14 17,393 65.07 17,384 64.99 Gross margin 5,016 34.49 5,006 34.86 9,335 34.93 9,365 35.01 Expenses: Selling, general and 3,232 22.22 3,189 22.21 6,351 23.76 6,283 23.49 administrative Depreciation 365 2.51 398 2.77 737 2.76 795 2.97 Interest - net 90 0.62 84 0.59 178 0.67 166 0.62 Total expenses 3,687 25.35 3,671 25.57 7,266 27.19 7,244 27.08 Pre-tax 1,329 9.14 1,335 9.29 2,069 7.74 2,121 7.93 earnings Income tax 499 3.43 503 3.50 777 2.91 800 2.99 provision Net earnings$ 830 5.71$ 832 5.79$ 1,292 4.83$ 1,321 4.94 Weighted average common shares 1,275 1,417 1,300 1,427 outstanding - basic Basic earnings per common$ 0.65 $ 0.58 $ 0.99 $ 0.92 share(1) Weighted average common shares 1,278 1,419 1,303 1,430 outstanding - diluted Diluted earnings per$ 0.64 $ 0.58 $ 0.98 $ 0.92 common share (1) Cash dividends$ 0.14 $ 0.11 $ 0.25 $ 0.20 per share Retained Earnings Balance at beginning of$ 16,715 $ 18,246 $ 17,371 $ 18,307 period Net earnings 830 832 1,292 1,321 Cash dividends (176 ) (157 ) (322 ) (287 ) Share (1,309 ) (467 ) (2,281 ) (887 ) repurchases Balance at end$ 16,060 $ 18,454 $ 16,060 $ 18,454 of period
(1) Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, which is derived by reducing net earnings by the earnings allocable to participating securities. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were
Lowe's Companies, Inc. Consolidated Balance Sheets In Millions, Except Par Value Data (Unaudited) (Unaudited) July 29, 2011 July 30, 2010 January 28, 2011 Assets Current assets: Cash and cash$ 568 $ 1,191 $ 652 equivalents Short-term 340 816 471 investments Merchandise 8,825 8,653 8,321 inventory - net Deferred income 222 205 193 taxes - net Other current 213 256 330 assets Total current 10,168 11,121 9,967 assets Property, less accumulated 22,195 22,274 22,089 depreciation Long-term 857 730 1,008 investments Other assets 825 508 635 Total assets$ 34,045 $ 34,633 $ 33,699 Liabilities and Shareholders' Equity Current liabilities: Current maturities$ 39 $ 37 $ 36 of long-term debt Accounts payable 5,378 4,888 4,351 Accrued compensation and 495 537 667 employee benefits Deferred revenue 831 770 707 Other current 1,934 1,761 1,358 liabilities Total current 8,677 7,993 7,119 liabilities Long-term debt, excluding current 6,581 5,533 6,537 maturities Deferred income 479 459 467 taxes - net Deferred revenue - extended protection 673 605 631 plans Other liabilities 856 830 833 Total liabilities 17,266 15,420 15,587 Shareholders' equity: Preferred stock -$5 par value, none - - - issued Common stock -$.50 par value; Shares issued and outstanding July 29, 2011 1,260 July 30, 2010 1,423 January 28, 2011 1,354 630 711 677 Capital in excess 7 9 11 of par value Retained earnings 16,060 18,454 17,371 Accumulated other comprehensive 82 39 53 income Total shareholders' 16,779 19,213 18,112 equity Total liabilities and shareholders'$ 34,045 $ 34,633 $ 33,699 equity
Lowe's Companies, Inc. Consolidated Statements of Cash Flows (Unaudited) In Millions Six Months Ended July 29, 2011 July 30, 2010 Cash flows from operating activities: Net earnings$ 1,292 $ 1,321 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 786 848 Deferred income taxes (50 ) (143 ) Loss on property and other assets - net 100 16 Share-based payment expense 59 55 Net changes in operating assets and liabilities: Merchandise inventory - net (495 ) (400 ) Other operating assets 125 (41 ) Accounts payable 1,026 600 Other operating liabilities 450 526 Net cash provided by operating activities 3,293 2,782 Cash flows from investing activities: Purchases of investments (948 ) (1,458 ) Proceeds from sale/maturity of investments 1,232 609 Increase in other long-term assets (218 ) (16 ) Property acquired (780 ) (612 ) Proceeds from sale of property and other long-term 20 9 assets Net cash used in investing activities (694 ) (1,468 ) Cash flows from financing activities: Net proceeds from issuance of long-term debt - 991 Repayment of long-term debt (18 ) (534 ) Proceeds from issuance of common stock under 55 62 share-based payment plans Cash dividend payments (294 ) (261 ) Repurchase of common stock (2,433 ) (1,015 ) Excess tax benefits of share-based payments 3 1 Net cash used in financing activities (2,687 ) (756 ) Effect of exchange rate changes on cash 4 1 Net (decrease)/increase in cash and cash (84 ) 559 equivalents Cash and cash equivalents, beginning of period 652 632 Cash and cash equivalents, end of period$ 568 $ 1,191
Source: Lowe's Companies, Inc.