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Lowe's Reports Third Quarter Sales and Earnings Results
Charges for Store Closings and Discontinued Projects Reduced Earnings Per Share by $0.17

MOORESVILLE, N.C., Nov 14, 2011 (BUSINESS WIRE) --

Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $225 million for the quarter ended October 28, 2011, a 44.3 percent decline from the same period a year ago. Diluted earnings per share decreased 37.9 percent to $0.18 from $0.29 in the third quarter of 2010. For the nine months ended October 28, 2011, net earnings decreased 12.1 percent from the same period a year ago to $1.52 billion while diluted earnings per share decreased 3.3 percent to $1.17.

Included in the above reported results are charges related to store closings and discontinued projects which, in the aggregate, reduced pre-tax earnings for the quarter by $336 million and diluted earnings per share by $0.17.

Sales for the quarter increased 2.3 percent to $11.9 billion, up from $11.6 billion in the third quarter of 2010. For the nine months ended October 28, 2011, sales were $38.6 billion, an increase of 0.6 percent from the same period a year ago. Comparable store sales for the third quarter increased 0.7 percent and for the first nine months of 2011 decreased 1.0 percent.

"Our performance is not at the level we expect relative to the market," commented Robert A. Niblock, Lowe's chairman, president and CEO. "We are making the changes necessary to right size the organization, improve speed to market and enhance the shopping experience. We are keenly focused on improving our core business while also developing new capabilities and services for the future. I am confident we are moving forward on a clear path that is not dependent on an unlikely near-term economic recovery.

"I would like to thank our hard-working employees for their ongoing dedication and customer focus during a time of significant change," Niblock added.

During the quarter, Lowe's opened eight stores. As of October 28, 2011, Lowe's operated 1,744 stores in the United States, Canada and Mexico representing 196.5 million square feet of retail selling space, a 0.5 percent increase over last year.

A conference call to discuss third quarter 2011 operating results is scheduled for today (Monday, November 14) at 9:00 am ET. 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 Third Quarter 2011 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until February 26, 2012.

Lowe's Business Outlook

Fourth Quarter 2011 - a 14-week Quarter (comparisons to fourth quarter 2010 - a 13-week quarter)

  • Total sales are expected to increase approximately 8 percent, including the 14th week
  • The 14th week is expected to increase total sales by approximately 7 percent
  • The company expects comparable store sales of flat to 1 percent
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to decrease approximately 50 basis points, which includes approximately 10 basis points impact from additional expenses associated with previously announced store closings
  • Depreciation expense is expected to be approximately $370 million
  • Diluted earnings per share of $0.20 to $0.23 are expected
  • Lowe's fourth quarter ends on February 3, 2012 with operating results to be publicly released on Monday, February 27, 2012

Fiscal Year 2011 - a 53-week Year (comparisons to fiscal year 2010 - a 52-week year)

  • Total sales are expected to increase 2 to 3 percent, including the 53rd week
  • The 53rd week is expected to increase total sales by approximately 1.5 percent
  • The company expects comparable store sales to decline approximately 1 percent
  • The company expects to open approximately 25 stores in 2011
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to decrease 80 to 90 basis points, which includes approximately 80 basis points impact from charges associated with store closings and discontinued projects
  • Depreciation expense is expected to be approximately $1.5 billion
  • Diluted earnings per share of $1.37 to $1.40 are expected for the fiscal year ending February 3, 2012, which includes approximately $0.20 per share impact from charges associated with store closings and discontinued projects

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 United States Securities and Exchange Commission (the "SEC") and the description of material changes therein or updated version thereof, if any, 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 in the "Risk Factors" included in our Annual Report on Form 10-K to the SEC and the description of material changes, if any, therein included in our Quarterly Reports on Form 10-Q. 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 2010 sales of $48.8 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 15 million customers a week at more than 1,725 home improvement stores in the United States, Canada and Mexico. 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 Nine Months Ended
October 28, 2011 October 29, 2010 October 28, 2011 October 29, 2010
Current Earnings Amount Percent Amount Percent Amount Percent Amount Percent
Net sales $ 11,852 100.00 $ 11,587 100.00 $ 38,579 100.00 $ 38,335 100.00
Cost of sales 7,815 65.94 7,526 64.95 25,208 65.34 24,909 64.98
Gross margin 4,037 34.06 4,061 35.05 13,371 34.66 13,426 35.02
Expenses:
Selling, general and administrative 3,233 27.27 2,931 25.30 9,583 24.84 9,214 24.03
Depreciation 361 3.05 399 3.44 1,098 2.84 1,194 3.12
Interest - net 91 0.77 80 0.69 269 0.70 246 0.64
Total expenses 3,685 31.09 3,410 29.43 10,950 28.38 10,654 27.79
Pre-tax earnings 352 2.97 651 5.62 2,421 6.28 2,772 7.23
Income tax provision 127 1.07 247 2.13 904 2.35 1,047 2.73
Net earnings $ 225 1.90 $ 404 3.49 $ 1,517 3.93 $ 1,725 4.50
Weighted average common shares outstanding - basic 1,250 1,390 1,283 1,415
Basic earnings per common share (1) $ 0.18 $ 0.29 $ 1.17 $ 1.21
Weighted average common shares outstanding - diluted 1,252 1,392 1,286 1,417
Diluted earnings per common share (1) $ 0.18 $ 0.29 $ 1.17 $ 1.21
Cash dividends per share $ 0.14 $ 0.11 $ 0.39 $ 0.31
Retained Earnings
Balance at beginning of period $ 16,060 $ 18,454 $ 17,371 $ 18,307
Net earnings 225 404 1,517 1,725
Cash dividends (176) (154) (498) (440)
Share repurchases - (560) (2,281) (1,448)
Balance at end of period $ 16,109 $ 18,144 $ 16,109 $ 18,144
(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 $223 million for the three months ended October 28, 2011 and $400 million for the three months ended October 29, 2010. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $1,505 million for the nine months ended October 28, 2011 and $1,710 million for the nine months ended October 29, 2010.
Lowe's Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data
(Unaudited) (Unaudited)
October 28, 2011 October 29, 2010 January 28, 2011
Assets
Current assets:
Cash and cash equivalents $ 675 $ 1,078 $ 652
Short-term investments 294 659 471
Merchandise inventory - net 8,990 8,543 8,321
Deferred income taxes - net 237 202 193
Other current assets 227 219 330
Total current assets 10,423 10,701 9,967
Property, less accumulated depreciation 21,888 22,180 22,089
Long-term investments 705 865 1,008
Other assets 850 595 635
Total assets $ 33,866 $ 34,341 $ 33,699
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $ 590 $ 36 $ 36
Accounts payable 5,242 4,959 4,351
Accrued compensation and employee benefits 622 678 667
Deferred revenue 789 802 707
Other current liabilities 1,913 1,533 1,358
Total current liabilities 9,156 8,008 7,119
Long-term debt, excluding current maturities 6,025 5,539 6,537
Deferred income taxes - net 322 456 467
Deferred revenue - extended protection plans 687 621 631
Other liabilities 867 825 833
Total liabilities 17,057 15,449 15,587
Shareholders' equity:
Preferred stock - $5 par value, none issued - - -
Common stock - $.50 par value;
Shares issued and outstanding
October 28, 2011 1,260
October 29, 2010 1,394
January 28, 2011 1,354 630 697 677
Capital in excess of par value 24 6 11
Retained earnings 16,109 18,144 17,371
Accumulated other comprehensive income 46 45 53
Total shareholders' equity 16,809 18,892 18,112
Total liabilities and shareholders' equity $ 33,866 $ 34,341 $ 33,699
Lowe's Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Nine Months Ended
October 28, 2011 October 29, 2010
Cash flows from operating activities:
Net earnings $ 1,517 $ 1,725

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 1,171 1,272
Deferred income taxes (200 ) (147 )
Loss on property and other assets - net 407 72
Share-based payment expense 81 84
Net changes in operating assets and liabilities:
Merchandise inventory - net (669 ) (288 )
Other operating assets 126 (25 )
Accounts payable 892 668
Other operating liabilities 567 472
Net cash provided by operating activities 3,892 3,833
Cash flows from investing activities:
Purchases of investments (1,200 ) (2,033 )
Proceeds from sale/maturity of investments 1,672 1,206
Increase in other long-term assets (217 ) (53 )
Property acquired (1,264 ) (1,012 )
Proceeds from sale of property and other long-term assets 26 24
Net cash used in investing activities (983 ) (1,868 )
Cash flows from financing activities:
Net proceeds from issuance of long-term debt - 991
Repayment of long-term debt (28 ) (542 )
Proceeds from issuance of common stock under

share-based payment plans

55 63
Cash dividend payments (470 ) (418 )
Repurchase of common stock (2,434 ) (1,616 )
Other - net (9 ) 1
Net cash used in financing activities (2,886 ) (1,521 )
Effect of exchange rate changes on cash - 2
Net increase in cash and cash equivalents 23 446
Cash and cash equivalents, beginning of period 652 632
Cash and cash equivalents, end of period $ 675 $ 1,078

SOURCE: Lowe's Companies, Inc.

Lowe's Companies, Inc.
Shareholders'/Analysts' Inquiries:
Tiffany Mason, 704-758-2033
or
Media Inquiries:
Chris Ahearn, 704-758-2304