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News Release

Lowe's Reports Record Second Quarter Earnings

MOORESVILLE, N.C., Aug. 20 /PRNewswire-FirstCall/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $1.02 billion for the quarter ended August 3, 2007, a 9.0 percent increase over the same period a year ago. Diluted earnings per share increased 11.7 percent to $0.67 from $0.60 in the second quarter of 2006. For the six months ended August 3, 2007, net earnings declined 1.0 percent to $1.76 billion while diluted earnings per share increased 1.8 percent to $1.15.

(Logo: http://www.newscom.com/cgi-bin/prnh/20031205/LOWLOGO )

Sales for the quarter increased 5.8 percent to $14.2 billion, up from $13.4 billion in the second quarter of 2006. For the six months ended August 3, 2007, sales increased 4.1 percent to $26.3 billion. Comparable store sales for the second quarter declined 2.6 percent and declined 4.4 percent in the first half of 2007.

"Despite the external pressures impacting our results, our continued focus on serving customers and executing our initiatives produced comparable store sales within our guidance range," explained Robert A. Niblock, Lowe's chairman and CEO. "Solid gross margin gains drove earnings that exceeded our guidance.

"Macro economic factors, including the many aspects of the housing market, continue to result in regionally disparate performance," Niblock added. "Markets in California and Florida, generally considered most pressured by housing, continue to perform significantly worse than average; markets in the Northeast, while still producing negative comparable store sales, are showing encouraging signs of improvement; and the many areas of the country where housing did not accelerate at an unsustainable rate over the past several years delivered positive comparable store sales. As expected, many of the difficult comparisons we faced during the last four quarters are beginning to lessen as we cycle hurricane recovery spending and deflationary price pressures from lumber and plywood.

"Although macro economic factors pressure the home improvement industry, we continue to capture market share in this challenging sales environment, and we remain committed to investing in our business to drive profitability and capitalize on long-term opportunities," Niblock added. "As evidenced by our market share gains, the experience of the tenured and talented management team at Lowe's allows us to capitalize on the opportunities provided in the current environment."

During the quarter, Lowe's opened 26 new stores including two relocations. As of August 3, 2007, Lowe's operated 1,424 stores in 49 states representing 161.6 million square feet of retail selling space, an 11.1 percent increase over last year.

A conference call to discuss second quarter 2007 operating results is scheduled for today (Monday, August 20) at 9:00 a.m. 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 Second Quarter 2007 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until November 18, 2007.

    Lowe's Business Outlook
    Third Quarter 2007 (comparisons to third quarter 2006)
    -- The company expects to open 40 new stores reflecting square footage
       growth of approximately 10 percent
    -- Total sales are expected to increase 7 to 8 percent
    -- The company expects approximately flat comparable store sales
    -- Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to decline approximately 140 basis points driven by bonus,
       retirement and insurance expenses that had significant leverage in last
       year's third quarter
    -- Store opening costs are expected to be approximately $47 million
    -- Diluted earnings per share of $0.43 to $0.45 are expected
    -- Lowe's third quarter ends on November 2, 2007 with operating results to
       be publicly released on Monday, November 19, 2007

    Fiscal Year 2007 (comparisons to fiscal year 2006)
    -- The company expects to open 150 to 160 stores in 2007 reflecting total
       square footage growth of approximately 11 percent
    -- Total sales are expected to increase approximately 6 percent
    -- The company expects comparable store sales to decline approximately 2
       percent
    -- Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to decline 70 to 80 basis points
    -- Store opening costs are expected to be $135 to $140 million
    -- Diluted earnings per share of $1.97 to $2.01 are expected for the
       fiscal year ending February 1, 2008

    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, 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 interest rate and currency fluctuations, fuel and other energy costs, slower growth in personal income, the availability of mortgage financing and other factors which can negatively affect our customers as well as our ability to: (i) respond to decreases in the number of new housing starts 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 develop new sites for store development; (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 matters; and (viii) respond to unanticipated weather conditions. 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 descriptions of any material changes in those "Risk Factors" included in our subsequent 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 2006 sales of $46.9 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 13 million customers a week at more than 1,425 home improvement stores in 49 states. 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

                                           August 3, 2007   August 4, 2006
    Current Earnings                       Amount  Percent  Amount  Percent

    Net sales                             $14,167  100.00  $13,389  100.00

    Cost of sales                           9,284   65.53    8,911   66.56

    Gross margin                            4,883   34.47    4,478   33.44

    Expenses:

    Selling, general and administrative     2,839   20.04    2,617   19.54

    Store opening costs                        26    0.18       28    0.21

    Depreciation                              332    2.35      283    2.11

    Interest - net                             50    0.35       30    0.23

    Total expenses                          3,247   22.92    2,958   22.09

    Pre-tax earnings                        1,636   11.55    1,520   11.35

    Income tax provision                      617    4.36      585    4.37

    Net earnings                           $1,019    7.19     $935    6.98


    Weighted average shares outstanding -
     basic                                  1,490            1,541

    Basic earnings per share                $0.68            $0.61

    Weighted average shares outstanding -
     diluted                                1,518            1,571

    Diluted earnings per share              $0.67            $0.60

    Cash dividends per share                $0.08            $0.05


    Retained Earnings

    Balance at beginning of period        $14,968          $12,985
    Cumulative effect adjustment 1              -                -
    Net earnings                            1,019              935
    Cash dividends                           (119)             (77)
    Share repurchases                        (658)               -
    Balance at end of period              $15,210          $13,843



                                                   Six Months Ended

                                           August 3, 2007  August 4, 2006
    Current Earnings                       Amount Percent  Amount  Percent

    Net sales                             $26,338  100.00  $25,310  100.00

    Cost of sales                          17,195   65.29   16,664   65.84

    Gross margin                            9,143   34.71    8,646   34.16

    Expenses:

    Selling, general and administrative     5,524   20.97    5,083   20.09

    Store opening costs                        38    0.14       53    0.20

    Depreciation                              656    2.49      557    2.20

    Interest - net                             97    0.37       65    0.26

    Total expenses                          6,315   23.97    5,758   22.75

    Pre-tax earnings                        2,828   10.74    2,888   11.41

    Income tax provision                    1,070    4.07    1,112    4.39

    Net earnings                           $1,758    6.67   $1,776    7.02


    Weighted average shares outstanding -
     basic                                  1,500            1,549

    Basic earnings per share                $1.17            $1.15

    Weighted average shares outstanding -
     diluted                                1,530            1,580

    Diluted earnings per share              $1.15            $1.13

    Cash dividends per share                $0.13            $0.08


    Retained Earnings

    Balance at beginning of period        $14,860          $12,191
    Cumulative effect adjustment 1             (8)               -
    Net earnings                            1,758            1,776
    Cash dividends                           (194)            (124)
    Share repurchases                      (1,206)               -
    Balance at end of period              $15,210          $13,843


    (1) The Company adopted FIN 48, Accounting for Uncertainty in Income
        Taxes, effective February 3, 2007.



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

                                          (Unaudited) (Unaudited)
                                            August 3,   August 4,  February 2,
                                              2007         2006       2007

    Assets

      Current assets:
        Cash and cash equivalents             $337         $316       $364
        Short-term investments                 325          456        432
        Merchandise inventory - net          7,799        7,176      7,144
        Deferred income taxes - net            209          165        161
        Other current assets                   181          215        213

        Total current assets                 8,851        8,328      8,314

        Property, less accumulated
         depreciation                       19,825       17,321     18,971
        Long-term investments                  627          200        165
        Other assets                           341          188        317

        Total assets                       $29,644      $26,037    $27,767

    Liabilities and shareholders' equity

      Current liabilities:
        Short-term borrowings                 $555           $-        $23
        Current maturities of
         long-term debt                         85           32         88
        Accounts payable                     4,167        3,629      3,524
        Accrued salaries and wages             371          371        425
        Self-insurance liabilities             726          653        650
        Deferred revenue                       819          826        731
        Other current liabilities            1,317        1,151      1,098

        Total current liabilities            8,040        6,662      6,539

        Long-term debt, excluding current
         maturities                          4,301        3,410      4,325
        Deferred income taxes - net            628          711        735
        Other long-term liabilities            706          334        443

        Total liabilities                   13,675       11,117     12,042

      Shareholders' equity:
        Preferred stock - $5 par value,
         none issued                             -            -          -
        Common stock - $.50 par value;
          Shares issued and outstanding
          August 3, 2007    1,485
          August 4, 2006    1,538
          February 2, 2007  1,525              742          769        762
        Capital in excess of par value          11          307        102
        Retained earnings                   15,210       13,843     14,860
        Accumulated other comprehensive
         income                                  6            1          1

        Total shareholders' equity          15,969       14,920     15,725

        Total liabilities and
         shareholders' equity              $29,644      $26,037     $27,767



    Lowe's Companies, Inc.
    Consolidated Statements of Cash Flows (Unaudited)
    In Millions

                                                         Six Months Ended
                                                      August 3,     August 4,
                                                        2007          2006

    Cash flows from operating activities:
      Net earnings                                     $1,758        $1,776
        Adjustments to reconcile net earnings to
         net cash provided by operating activities:
          Depreciation and amortization                   701           591
          Deferred income taxes                             3           (34)
          Loss on disposition/writedown of
           fixed and other assets                          17             5
          Share-based payment expense                      45            35
          Changes in operating assets and liabilities:
            Merchandise inventory - net                  (655)         (541)
            Other operating assets                         56           (93)
            Accounts payable                              643           797
            Other operating liabilities                   510            68
      Net cash provided by operating activities         3,078         2,604

    Cash flows from investing activities:
      Purchases of short-term investments                (368)         (228)
      Proceeds from sale/maturity of short-term
       investments                                        524           399
      Purchases of long-term investments               (1,102)         (225)
      Proceeds from sale/maturity of long-term
       investments                                        589           141
      (Increase) decrease in other long-term assets       (23)           13
      Fixed assets acquired                            (1,698)       (1,556)
      Proceeds from the sale of fixed and other
       long-term assets                                    26            23
      Net cash used in investing activities            (2,052)       (1,433)

    Cash flows from financing activities:
      Net increase in short-term borrowings               532             -
      Proceeds from issuance of long-term debt              4             -
      Repayment of long-term debt                         (31)          (16)
      Proceeds from issuance of common stock under
       employee stock purchase plan                        40            36
      Proceeds from issuance of common stock from
       stock options exercised                             43            48
      Cash dividend payments                             (194)         (124)
      Repurchase of common stock                       (1,450)       (1,226)
      Excess tax benefits of share-based payments           3             4
      Net cash used in financing activities            (1,053)       (1,278)

    Net decrease in cash and cash equivalents             (27)         (107)
    Cash and cash equivalents, beginning of period        364           423
    Cash and cash equivalents, end of period             $337          $316

SOURCE  Lowe's Companies, Inc.
    -0-                             08/20/2007
    /CONTACT: Shareholders'-Analysts' Inquiries - Robbin Moore-Randolph,
+1-704-758-3579; or Media Inquiries - Chris Ahearn, +1-704-758-2304, both of
Lowe's Companies, Inc./
    /Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20031205/LOWLOGO
              AP Archive:  http://photoarchive.ap.org
              PRN Photo Desk, photodesk@prnewswire.com/
    /Web site:  http://www.lowes.com /
    (LOW)

CO:  Lowe's Companies, Inc.
ST:  North Carolina
IN:  REA HOU
SU:  ERN ERP CCA

DB-JK
-- CLM016 --
9116 08/20/2007 07:00 EDT http://www.prnewswire.com