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Lowe's Reports Record Earnings for First Quarter
-- First Quarter Net Earnings Increased 21.7 Percent -- -- First Quarter Total Sales Increased 11.4 Percent --

WILKESBORO, N.C., May 19, 2003 /PRNewswire-FirstCall via COMTEX/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $421 million for the quarter ended May 2, 2003, a 21.7 percent increase over the same period a year ago. Diluted earnings per share increased 20.5 percent to $0.53 from $0.44 in the first quarter of 2002.

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Sales for the quarter increased 11.4 percent to $7.21 billion, up from $6.47 billion in the first quarter of 2002. Comparable store sales for the first quarter increased 0.1 percent.

"A strong housing market and improving consumer confidence continue to support the American conviction to invest in the home despite the effect of adverse weather and uncertain world events," commented Robert L. Tillman, Lowe's chairman and CEO. "In a society where home is increasingly the centerpiece of the American dream, Lowe's makes it easy for our customers to express their unique taste and style by providing compelling stores, knowledgeable service, and great products at guaranteed low prices."

During the quarter, Lowe's opened 21 new stores. As of May 2, 2003, Lowe's operated 875 stores in 45 states representing 97.2 million square feet of retail selling space, a 12.9 percent increase over last year.

A conference call to discuss first quarter 2003 operating results is scheduled for today (Monday, May 19) at 9:00 a.m. EDT. Please dial 888-817- 4020 (international callers dial 706-679-3245) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe's website at and clicking on About Lowe's, Investor Information, Shareholder Services, Calendar of Events. A replay of the call will be archived on for 7 days.

    Comments Regarding Adoption of Emerging Issues Task Force Issue 02-16

Emerging Issues Task Force ("EITF") Issue 02-16, "Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor," was issued by the EITF in November 2002 with transition provisions subsequently issued in January 2003. The January 2003 transition rules stated that this issue would apply to all agreements entered into or significantly modified after December 31, 2002.

As we have previously announced, our current accounting treatment for vendor provided funds is consistent with the provisions of this issue with the exception of cooperative advertising allowances or co-op. We currently account for co-op as direct offsets against advertising expenses. Under EITF 02-16, these types of funds can only be used to offset advertising expenses if the co-op funds are a reimbursement of a specific, identifiable and incremental cost incurred by Lowe's in selling the vendor's product.

We do not expect this issue to have a material impact on our fiscal 2003 financial statements since substantially all of our cooperative advertising allowance agreements for fiscal 2003 were entered into prior to December 31, 2002.

We have assessed the historic volume of co-op reimbursements that have been received in order to determine which of these reimbursements would meet the specific, identifiable and incremental criteria outlined under this issue and accordingly, qualify as a direct offset to advertising expense. Based on our analysis of the impact on net income, and the administrative costs to identify and track reimbursements between those qualifying for expense offset and those requiring inventory cost reduction, we have elected to treat all co-op funds received from vendors as a reduction in the cost of inventory and recognize them as a reduction to cost of goods sold when the inventory is liquidated. We estimate that the prospective change in the timing of income recognition will reduce fiscal 2004 EPS by approximately $0.12 per share. Had our vendor agreements for fiscal 2003 not been entered into prior to December 31, 2002, we estimate that the reduction of EPS would be approximately $0.11 per share in fiscal 2003.

The adoption of this issue does not change the ultimate cash to be received under these agreements nor the timing of cash flows, only the timing of when it is reflected in net income. In short, this represents a change only in the timing of earnings recognition, not in the amount of earnings ultimately recognized over the terms of the agreements.

    Lowe's Business Outlook

This outlook is based on current expectations and includes "forward- looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although the company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

    Second Quarter 2003 (comparisons to second quarter 2002)
    * The company expects to open 25 stores reflecting square footage growth
      of approximately 13 percent
    * Total sales are expected to increase approximately 13 percent
    * The company expects to report comparable store sales of 2 to 4 percent
    * Operating margin (defined as gross margin less SG&A and depreciation) is
      expected to increase 20 to 30 basis points
    * Store opening costs are expected to be approximately $23 million
    * Diluted earnings per share of $0.68 to $0.70 are expected
    * Lowe's second quarter ends on August 1, 2003 with operating results to
      be publicly released on Monday, August 18, 2003

    Fiscal Year 2003 (comparisons to fiscal year 2002)
    * The company expects to open 130 stores in 2003 reflecting total square
      footage growth of approximately 15 percent
    * Total sales are expected to increase approximately 14 to 15 percent for
      the year
    * The company expects to report a comparable store sales increase of
      approximately 3 to 4 percent
    * Operating margin (defined as gross margin less SG&A and depreciation) is
      expected to increase 20 to 30 basis points
    * Store opening costs are expected to be approximately $140 million
    * Diluted earnings per share of $2.16 to $2.20 are expected for the fiscal
      year ending January 30, 2004

This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although the company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Possible risks and uncertainties regarding these statements include, but are not limited to, the direction of general economic conditions, the availability of real estate for expansion and its successful development, particularly in major metropolitan markets, the availability of sufficient labor to facilitate growth, fluctuations in prices and availability of product, unanticipated impact of competition, legal or regulatory developments, and weather conditions that affect sales.

With fiscal year 2002 sales of $26.5 billion, Lowe's Companies, Inc. is a FORTUNE 100 company that serves approximately nine million customers a week at more than 875 home improvement stores in 45 states. In 2003, FORTUNE named Lowe's America's Most Admired Specialty Retailer. Based in Wilkesboro, N.C., the 57-year old company is the second-largest home improvement retailer in the world. For more information, visit .

    Lowe's Companies, Inc.
    Consolidated Statements of Current and Retained Earnings (Unaudited)
    In Millions, Except Per Share Data

                                                  Three Months Ended
                                            May 2, 2003       May 3, 2002
    Current Earnings                      Amount   Percent  Amount   Percent

    Net sales                              $7,211   100.00   $6,471   100.00

    Cost of sales                           4,973    68.96    4,548    70.29

    Gross margin                            2,238    31.04    1,923    29.71


    Selling, general and administrative     1,314    18.22    1,141    17.64

    Store opening costs                        19     0.26       37     0.57

    Depreciation                              180     2.50      145     2.24

    Interest                                   48     0.67       47     0.73

    Total expenses                          1,561    21.65    1,370    21.18

    Pre-tax earnings                          677     9.39      553     8.53

    Income tax provision                      256     3.55      207     3.19

    Net earnings                             $421     5.84     $346     5.34

    Shares outstanding - Basic                783               777

    Basic earnings per share                $0.54             $0.45

    Shares outstanding - Diluted              802               798

    Diluted earnings per share              $0.53             $0.44

    Retained Earnings
    Balance at beginning of period         $5,887            $4,482
    Net earnings                              421               346
    Cash dividends                            (20)              (16)
    Balance at end of period               $6,288            $4,812

    Lowe's Companies, Inc.
    Consolidated Balance Sheets
    In Millions, Except Par Value Data

                                          (Unaudited) (Unaudited)
                                             May 2,      May 3,   January 31,
                                              2003        2002        2003

         Cash and cash equivalents             $1,600      $1,476        $853
         Short-term investments                    77          48         273
         Accounts receivable - net                189         193         172
         Merchandise inventory                  4,864       4,360       3,968
         Deferred income taxes                     72          97          58
         Other assets                             251         267         244

         Total current assets                   7,053       6,441       5,568

         Property, less accumulated
          depreciation                         10,545       8,992      10,352
         Long-term investments                    132          19          29
         Other assets                             170         159         160

         Total assets                         $17,900     $15,611     $16,109

    Liabilities and Shareholders' Equity

         Current liabilities:
         Short-term borrowings                    $50        $100         $50
         Current maturities of long-term
          debt                                     30          60          29
         Accounts payable                       3,069       2,740       1,943
         Employee retirement plans                 27         136          88
         Accrued salaries and wages               169         175         306
         Other current liabilities              1,570       1,286       1,162

         Total current liabilities              4,915       4,497       3,578

         Long-term debt, excluding current
          maturities                            3,733       3,736       3,736
         Deferred income taxes                    499         314         478
         Other long-term liabilities               18           7          15

         Total liabilities                      9,165       8,554       7,807

         Shareholders' equity:
         Preferred stock - $5 par value,
          none issued                              --          --          --
         Common stock - $.50 par value;
                 Shares Issued and
              May 2, 2003
              May 3, 2002
              January 31, 2003
               782                                392         389         391
         Capital in excess of par               2,055       1,856       2,023
         Retained earnings                      6,288       4,812       5,887
         Accumulated other comprehensive
          income                                   --          --           1

         Total shareholders' equity             8,735       7,057       8,302

         Total liabilities and
          shareholders' equity                $17,900     $15,611     $16,109

    Lowe's Companies, Inc.
    Consolidated Statements of Cash Flows (Unaudited)
    In Millions
                                                For the Three Months Ended
                                                   May 2,            May 3,
                                                    2003              2002
    Cash Flows From Operating Activities:
         Net Earnings                                 $421              $346
         Adjustments to Reconcile Net
          Earnings to Net Cash
           Provided By Operating
             Depreciation and
              Amortization                             184               150
             Deferred Income Taxes                       7                 4
             Loss on
              Disposition/Writedown of
              Fixed and Other Assets                     7                 9
             Stock-based compensation
              expense                                    5                --
             Tax Effect of Stock Options
              Exercised                                  4                 6
             Changes in Operating Assets
              and Liabilities:
               Accounts Receivable - Net               (17)              (27)
               Merchandise Inventory                  (896)             (749)
               Other Operating Assets                   (8)              (69)
               Accounts Payable                      1,126             1,026
               Employee Retirement Plans               (61)               33
               Other Operating
                Liabilities                            274               445
         Net Cash Provided by Operating
          Activities                                 1,046             1,174

    Cash Flows from Investing Activities:
         Decrease (Increase) in
          Investment Assets:
            Short-Term Investments                     206                10
            Purchases of Long-Term
             Investments                              (164)               (2)
            Proceeds from Sale/Maturity
             of Long-Term Investments                   47                --
         Increase in Other Long-Term
          Assets                                       (16)               (9)
         Fixed Assets Acquired                        (392)             (501)
         Proceeds from the Sale of Fixed
          and Other Long-Term Assets                    19                 4
         Net Cash Used in Investing
          Activities                                  (300)             (498)

    Cash Flows from Financing Activities:
         Repayment of Long-Term Debt                    (7)               (7)
         Proceeds from Stock Options
          Exercised                                     28                24
         Cash Dividend Payments                        (20)              (16)
         Net Cash Provided by Financing
          Activities                                     1                 1

    Net Increase in Cash and Cash
     Equivalents                                       747               677
    Cash and Cash Equivalents, Beginning
     of Period                                         853               799
    Cash and Cash Equivalents, End of
     Period                                         $1,600            $1,476

SOURCE Lowe's Companies, Inc.

shareholders, Paul Taaffe, +1-336-658-5239, or media, Chris
Ahearn, +1-336-658-7387, both of Lowe's Companies, Inc.
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