<font> Lowe’s Reports First Quarter Sales and Earnings Results </font>
<font> Monday, May 18, 2009 7:00:00 AM ET </font> Lowe’s Companies, Inc. ( LOW ), the world’s second-largest home improvement retailer, today reported net earnings of $476 million for the quarter ended May 1, 2009, a 21.6 percent decline versus the same period a year ago. Diluted earnings per share declined 22.0 percent to $0.32 from $0.41 in the first quarter of 2008.
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Sales for the quarter declined 1.5 percent to $11.8 billion, down from $12.0 billion in the first quarter of 2008. Comparable store sales for the first quarter declined 6.6 percent.
"Despite the difficult external environment, Lowe’s strong commitment to customer service and a compelling product offering led to continued market share gains in the first quarter and helped deliver sales within our guidance range," commented Robert A. Niblock, Lowe’s chairman and CEO. "In addition, solid gross margin growth combined with appropriate expense management allowed us to deliver earnings per share above our guidance for the quarter.
"The economic pressures on consumers remain intense, and bigger ticket projects continue to be postponed as wary home improvement consumers watch the economic climate and housing market dynamics very closely," Niblock added. "But, as spring arrived, we saw relative strength in smaller, outdoor projects.
"In recent weeks we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets, and home prices slow their decline," Niblock continued. "These are all positive signs for the stabilization and ultimate recovery of home improvement industry sales, but since many of these variables remain at or near historic lows, we will continue to plan conservatively and manage expenses appropriately. Lowe’s remains focused on positioning the company for the future while maximizing opportunities presented today."
During the quarter, Lowe’s opened 21 new stores. As of May 1, 2009, Lowe’s operated 1,670 stores in the United States and Canada representing 188.8 million square feet of retail selling space, a 7.0 percent increase over last year.
A conference call to discuss first quarter 2009 operating results is scheduled for today (Monday, May 18) at 9:00 am EDT. Please dial 888-817-4020 (international callers dial 706-679-8762) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s First Quarter 2009 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until August 16, 2009.
Lowe’s Business Outlook
Second Quarter 2009 (comparisons to second quarter 2008)
-- The company expects to open approximately 18 new stores reflecting
square footage growth of approximately 7 percent
-- Total sales are expected to range from a decline of 2 percent to an
increase of 1 percent
-- The company expects comparable store sales to decline 4 to 8 percent
-- Earnings before interest and taxes as a percentage of sales (operating
margin) is expected to decline approximately 160 basis points driven by
payroll, fixed cost and depreciation deleverage
-- Store opening costs are expected to be approximately $13 million
-- Diluted earnings per share of $0.51 to $0.55 are expected
-- Lowe’s second quarter ends on July 31, 2009 with operating results
to be publicly released on Monday, August 17, 2009
Fiscal Year 2009 (comparisons to fiscal year 2008)
-- The company expects to open 60 to 70 stores in 2009 reflecting total
square footage growth of approximately 4 percent
-- Total sales are expected to range from a decline of 2 percent to an
increase of 1 percent
-- The company expects comparable store sales to decline 4 to 8 percent
-- Earnings before interest and taxes as a percentage of sales (operating
margin) is expected to decline 130 to 140 basis points
-- Store opening costs are expected to be approximately $50 million
-- Diluted earnings per share of $1.13 to $1.25 are expected for the fiscal
year ending January 29, 2010
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, 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 rising unemployment, interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, changes in consumer spending, the availability and increasing regulation of consumer credit and mortgage financing, changes in the rate of housing turnover, 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 and the level of repairs, remodeling, and additions to existing homes, as well as 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 legal and regulatory developments; and (viii) respond to unanticipated weather conditions that could adversely affect sales. For more information about these and other risks and uncertainties that we are exposed to, you should read the "Risk Factors" included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission and the description of material changes, if any, in those "Risk Factors" included in our Quarterly Reports on Form 10-Q.
The forward-looking statements contained in this news release speak only as of the date of this release and the company does not assume any obligation to update any such statements.
With fiscal year 2008 sales of $48.2 billion, Lowe’s Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 14 million customers a week at more than 1,650 home improvement stores in the United States and Canada. 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
----------------------------------------------
May 1, 2009 May 2, 2008
Current Earnings Amount Percent Amount Percent
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Net sales $11,832 100.00 $12,009 100.00
Cost of sales 7,636 64.54 7,843 65.31
Gross margin 4,196 35.46 4,166 34.69
Expenses:
Selling, general and
administrative 2,944 24.88 2,725 22.69
Store opening costs 13 0.11 18 0.15
Depreciation 401 3.39 375 3.12
Interest - net 78 0.66 76 0.63
Total expenses 3,436 29.04 3,194 26.59
Pre-tax earnings 760 6.42 972 8.10
Income tax provision 284 2.40 365 3.04
Net earnings $476 4.02 $607 5.06
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Weighted average common shares
outstanding - basic 1,462 1,454
Basic earnings per
common share $0.32 $0.42
Weighted average common shares
outstanding - diluted 1,464 1,477
Diluted earnings per
common share $0.32 $0.41
Cash dividends per share $0.085 $0.080
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Retained Earnings
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Balance at beginning of period $17,049 $15,345
Net earnings 476 607
Cash dividends (126) (117)
Balance at end of period $17,399 $15,835
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Lowe’s Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data
--------------------------------------------------------------------------
(Unaudited) (Unaudited)
May 1, 2009 May 2, 2008 January 30, 2009
------------ ------------ -----------------
Assets
Current assets:
Cash and cash equivalents $682 $913 $245
Short-term investments 460 295 416
Merchandise inventory
- net 9,013 8,438 8,209
Deferred income taxes
- net 183 259 166
Other current assets 264 253 215
------------ ------------ -----------------
Total current assets 10,602 10,158 9,251
Property, less accumulated
depreciation 22,715 21,641 22,722
Long-term investments 448 537 253
Other assets 444 318 460
------------ ------------ -----------------
Total assets $34,209 $32,654 $32,686
============ ============ =================
Liabilities and shareholders’
equity
Current liabilities:
Short-term borrowings $- $147 $987
Current maturities of
long-term debt 52 34 34
Accounts payable 5,843 5,345 4,109
Accrued compensation and
employee benefits 535 481 434
Self-insurance
liabilities 750 685 751
Deferred revenue 741 893 674
Other current
liabilities 1,283 1,388 1,033
------------ ------------ -----------------
Total current liabilities 9,204 8,973 8,022
Long-term debt, excluding
current maturities 5,023 5,576 5,039
Deferred income taxes
- net 594 699 660
Other liabilities 951 787 910
------------ ------------ -----------------
Total liabilities 15,772 16,035 14,631
------------ ------------ -----------------
Shareholders’ equity:
Preferred stock - $5 par
value, none issued - - -
Common stock - $.50
par value;
Shares issued and
outstanding
May 1, 2009 1,474
May 2, 2008 1,462
January 30, 2009 1,470 737 731 735
Capital in excess of par
value 296 48 277
Retained earnings 17,399 15,835 17,049
Accumulated other
comprehensive income
(loss) 5 5 (6)
------------ ------------ -----------------
Total shareholders’
equity 18,437 16,619 18,055
------------ ------------ -----------------
Total liabilities
and shareholders’
equity $34,209 $32,654 $32,686
============ ============ =================
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Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
--------------------------------------------------------------------------
Three Months Ended
May 1, 2009 May 2, 2008
--------------------------
Cash flows from operating
activities:
Net earnings $476 $607
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 434 404
Deferred income taxes (83) 17
Loss on property and other assets 9 21
Transaction loss from exchange
rate changes 1 -
Share-based payment expense 24 28
Changes in operating assets and
liabilities:
Merchandise inventory - net (801) (828)
Other operating assets (1) 42
Accounts payable 1,732 1,633
Other operating liabilities 554 614
Net cash provided by operating activities 2,345 2,538
Cash flows from investing activities:
Purchases of short-term investments (68) (64)
Proceeds from sale/maturity of
short-term investments 122 86
Purchases of long-term investments (302) (325)
Proceeds from sale/maturity of
long-term investments 6 224
Decrease in other long-term assets 15 -
Property acquired (572) (805)
Proceeds from sale of property and
other long-term assets 11 4
Net cash used in investing activities (788) (880)
Cash flows from financing activities:
Net decrease in short-term borrowings (986) (915)
Proceeds from issuance of long-term debt - 8
Repayment of long-term debt (8) (13)
Proceeds from issuance of common stock
from stock options exercised 1 10
Cash dividend payments (126) (117)
Excess tax benefits of share-based payments - 1
Net cash used in financing activities (1,119) (1,026)
Effect of exchange rate changes on cash (1) -
Net increase in cash and cash equivalents 437 632
Cash and cash equivalents, beginning of period 245 281
Cash and cash equivalents, end of period $682 $913
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SOURCE Lowe’s Companies, Inc.
http://www.Lowes.com
$24.55 (08/18/08)
