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News Release

Lowe's Reports Fourth Quarter and Fiscal Year 2007 Earnings

MOORESVILLE, N.C., Feb. 25 /PRNewswire-FirstCall/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $408 million for the quarter ended February 1, 2008, a 33.4 percent decline over the same period a year ago. Diluted earnings per share declined 30.0 percent to $0.28 from $0.40 in the fourth quarter of 2006. For the fiscal year ended February 1, 2008, net earnings declined 9.5 percent to $2.81 billion while diluted earnings per share declined 6.5 percent to $1.86.

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

Sales for the quarter declined 0.3 percent to just under $10.4 billion. For the fiscal year ended February 1, 2008, sales increased 2.9 percent to $48.3 billion. Comparable store sales declined 7.6 percent for the fourth quarter and 5.1 percent for fiscal 2007.

"Fourth quarter and fiscal year 2007 sales fell short of our plan as we faced an unprecedented decline in housing turnover, falling home prices in many areas and turbulent mortgage markets that impacted both sentiment related to home improvement purchases as well as consumers' access to capital," explained Robert A. Niblock, Lowe's chairman and CEO. "While our results fell short of our expectations, I want to thank our more than 215,000 employees whose customer focus allowed us to capture market share in both the quarter and the year. Those market share gains combined with appropriate expense management in a very challenging environment for the home improvement industry allowed us to deliver respectable annual earnings per share.

"As we look to fiscal 2008, we know the next several quarters will be challenging on many fronts as industry sales are likely to remain soft," Niblock continued. "We remain focused on what we can control: providing great customer service while managing expenses and offering customers the best shopping experience in home improvement. As the year progresses, the recent Federal Reserve interest rate cuts and the approved fiscal stimulus package are expected to lend support to the broader economy and the consumer. As a result, many of the headwinds facing the housing market and the home improvement industry should lessen, and consumers' confidence in investing in and improving their homes should improve."

During the quarter, Lowe's opened 72 new stores including two relocations. As of February 1, 2008, Lowe's operated 1,534 stores in the United States and Canada representing 174.1 million square feet of retail selling space, a 10.9 percent increase over last year.

A conference call to discuss fourth quarter and fiscal 2007 operating results is scheduled for today (Monday, February 25) at 9:00 a.m. EST. 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 Fourth Quarter and Fiscal 2007 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until May 18, 2008.

    Lowe's Business Outlook
    First Quarter 2008 (comparisons to first quarter 2007)
    * The company expects to open approximately 21 new stores reflecting
      square footage growth of approximately 11 percent
    * Total sales are expected to increase approximately 2 percent
    * The company expects comparable store sales to decline 5 to 7 percent
    * Earnings before interest and taxes (EBIT) margin is expected to decline
      approximately 170 basis points driven by payroll, fixed cost, incentive
      compensation and depreciation de-leverage
    * Store opening costs are expected to be approximately $17 million
    * Diluted earnings per share of $0.38 to $0.42 are expected
    * Lowe's first quarter ends on May 2, 2008 with operating results to be
      publicly released on Monday, May 19, 2008

    Fiscal Year 2008 (comparisons to fiscal year 2007)
    * The company expects to open approximately 120 stores in 2008 reflecting
      total square footage growth of approximately 8 percent
    * Total sales are expected to increase approximately 3 percent
    * The company expects comparable store sales to decline 5 to 6 percent
    * Earnings before interest and taxes (EBIT) margin is expected to decline
      approximately 180 basis points
    * Store opening costs are expected to be approximately $109 million
    * Diluted earnings per share of $1.50 to $1.58 are expected for the fiscal
      year ending January 30, 2009

    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 interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, declining housing turnover, the availability 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 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 2007 sales of $48.3 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 14 million customers a week at more than 1,525 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
                                         February 1, 2008 February 2, 2007
    Current Earnings                      Amount  Percent  Amount  Percent

    Net sales                             $10,379  100.00  $10,406  100.00

    Cost of sales                           6,759   65.12    6,719   64.56

    Gross margin                            3,620   34.88    3,687   35.44

    Expenses:

    Selling, general and administrative     2,489   23.97    2,335   22.44

    Store opening costs                        61    0.59       49    0.47

    Depreciation                              370    3.57      308    2.97

    Interest - net                             47    0.45       43    0.42

    Total expenses                          2,967   28.58    2,735   26.30

    Pre-tax earnings                          653    6.30      952    9.14

    Income tax provision                      245    2.37      339    3.25

    Net earnings                             $408    3.93     $613    5.89


    Weighted average shares outstanding -
     basic                                  1,456            1,519

    Basic earnings per share                $0.28            $0.40

    Weighted average shares outstanding -
     diluted                                1,482            1,549

    Diluted earnings per share              $0.28            $0.40

    Cash dividends per share                $0.08            $0.05


    Retained Earnings

    Balance at beginning of period        $15,281          $14,323
    Cumulative effect adjustment 1              -                -
    Net earnings                              408              613
    Cash dividends                           (117)             (76)
    Share repurchases                        (227)               -
    Balance at end of period              $15,345          $14,860




                                                    Years Ended
                                         February 1, 2008 February 2, 2007
    Current Earnings                      Amount  Percent  Amount  Percent

    Net sales                             $48,283  100.00  $46,927  100.00

    Cost of sales                          31,556   65.36   30,729   65.48

    Gross margin                           16,727   34.64   16,198   34.52

    Expenses:

    Selling, general and administrative    10,515   21.78    9,738   20.75

    Store opening costs                       141    0.29      146    0.31

    Depreciation                            1,366    2.83    1,162    2.48

    Interest - net                            194    0.40      154    0.33

    Total expenses                         12,216   25.30   11,200   23.87

    Pre-tax earnings                        4,511    9.34    4,998   10.65

    Income tax provision                    1,702    3.52    1,893    4.03

    Net earnings                           $2,809    5.82   $3,105    6.62


    Weighted average shares outstanding -
     basic                                  1,481            1,535

    Basic earnings per share                $1.90            $2.02

    Weighted average shares outstanding -
     diluted                                1,510            1,566

    Diluted earnings per share              $1.86            $1.99

    Cash dividends per share                $0.29            $0.18


    Retained Earnings

    Balance at beginning of period        $14,860          $12,191
    Cumulative effect adjustment 1             (8)               -
    Net earnings                            2,809            3,105
    Cash dividends                           (428)            (276)
    Share repurchases                      (1,888)            (160)
    Balance at end of period              $15,345          $14,860


    (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)
                                                    February 1,    February 2,
                                                       2008            2007
    Assets

       Current assets:
         Cash and cash equivalents                     $281              $364
         Short-term investments                         249               432
         Merchandise inventory - net                  7,611             7,144
         Deferred income taxes - net                    302               161
         Other current assets                           279               213

         Total current assets                         8,722             8,314

         Property, less accumulated
          depreciation                               21,376            18,971
         Long-term investments                          509               165
         Other assets                                   313               317

         Total assets                               $30,920           $27,767

    Liabilities and shareholders' equity

       Current liabilities:
         Short-term borrowings                       $1,064               $23
         Current maturities of long-term
          debt                                           40                88
         Accounts payable                             3,713             3,524
         Accrued salaries and wages                     424               425
         Self-insurance liabilities                     671               650
         Deferred revenue                               717               731
         Other current liabilities                    1,137             1,098

         Total current liabilities                    7,766             6,539

         Long-term debt, excluding current
          maturities                                  5,576             4,325
         Deferred income taxes - net                    712               735
         Other liabilities                              768               443

         Total liabilities                           14,822            12,042

       Shareholders' equity:
         Preferred stock - $5 par value,
          none issued                                     -                 -
         Common stock - $.50 par value;
    Shares issued and outstanding
    February 1, 2008  1,458
    February 2, 2007  1,525                             729               762
         Capital in excess of par value                  16               102
         Retained earnings                           15,345            14,860
         Accumulated other comprehensive
          income                                          8                 1

         Total shareholders' equity                  16,098            15,725

         Total liabilities and
          shareholders' equity                      $30,920           $27,767



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

                                                         Years Ended
                                                         (Unaudited)
                                                   February 1,     February 2,
                                                      2008             2007
    Cash flows from operating activities:
      Net earnings
      Adjustments to reconcile net earnings
       to net cash provided by                        $2,809           $3,105
       operating activities:
      Depreciation and amortization                    1,464            1,237
      Deferred income taxes                              (11)              (6)
      Loss on disposition/writedown of
       fixed and other assets                             51               23
      Share-based payment expense                         99               62
      Changes in operating assets and
       liabilities:
        Merchandise inventory - net                     (464)            (509)
        Other operating assets                           (45)            (135)
        Accounts payable                                 185              692
        Other operating liabilities                      259               33
      Net cash provided by operating
       activities                                      4,347            4,502

    Cash flows from investing activities:
      Purchases of short-term investments               (920)            (284)
      Proceeds from sale/maturity of short-
       term investments                                1,183              572
      Purchases of long-term investments              (1,588)            (558)
      Proceeds from sale/maturity of long-
       term investments                                1,162              415
      Increase in other long-term assets                  (7)             (16)
      Fixed assets acquired                           (4,010)          (3,916)
      Proceeds from the sale of fixed and
       other long-term assets                             57               72
      Net cash used in investing activities           (4,123)          (3,715)

    Cash flows from financing activities:
      Net increase in short-term borrowings            1,041               23
      Proceeds from issuance of long-term
       debt                                            1,296              989
      Repayment of long-term debt                        (96)             (33)
      Proceeds from issuance of common
       stock under employee stock purchase
       plan                                               80               76
      Proceeds from issuance of common
       stock from stock options exercised                 69              100
      Cash dividend payments                            (428)            (276)
      Repurchase of common stock                      (2,275)          (1,737)
      Excess tax benefits of share-based
       payments                                            6               12
      Net cash used in financing activities             (307)            (846)

    Net decrease in cash and cash
     equivalents                                         (83)             (59)
    Cash and cash equivalents, beginning
     of period                                           364              423
    Cash and cash equivalents, end of
     period                                             $281             $364
SOURCE  Lowe's Companies, Inc.
    -0-                             02/25/2008
    /CONTACT:  Shareholders'-Analysts' Inquiries: Robbin Moore-Randolph,
+1-704-758-3579, 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
SU:  ERN ERP CCA

KK-LA
-- CLM015b --
0222 02/25/2008 07:00 EST http://www.prnewswire.com