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News Release

Lowe's Reports Fourth Quarter and Fiscal Year 2008 Sales and Earnings Results
MOORESVILLE, N.C., Feb 20, 2009 /PRNewswire-FirstCall via COMTEX/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $162 million for the quarter ended January 30, 2009, a 60.3 percent decline from the same period a year ago. Diluted earnings per share declined 60.7 percent to $0.11 from $0.28 in the fourth quarter of 2007. For the fiscal year ended January 30, 2009, net earnings declined 21.9 percent to $2.20 billion while diluted earnings per share declined 19.9 percent to $1.49.

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Sales for the quarter declined 3.8 percent to $9.98 billion. For the fiscal year ended January 30, 2009, sales declined 0.1 percent to $48.2 billion. Comparable store sales declined 9.9 percent for the fourth quarter and 7.2 percent for fiscal 2008.

"The economic pressures on consumers intensified in the fourth quarter, resulting in a further decline in consumer confidence and dramatic reductions in consumer spending," commented Robert A. Niblock, Lowe's chairman and CEO. "As a result, our comparable store sales for the quarter remained weak and fell at the low end of our expectations. However, in this challenging sales environment and throughout this prolonged industry downturn, we are continuing to capture market share, which is evidence of our compelling product offering and commitment to customer service."

During the fourth quarter holiday season, a period when Lowe's competes with a broader group of retailers for customer traffic, the competition for sales was intense. Reacting to the extreme promotional environment and to the sharp decline in consumer spending, the company chose to be more aggressive than planned with seasonal merchandise markdowns. This pressured gross margin, but helped improve the company's inventory position heading into fiscal 2009. While the competition for sales remains high, and the state of the consumer is certainly still in question, the company believes many of the pressures on gross margin were unique to promotional activity during the holiday season and expects those pressures to abate in the first quarter.

"Through disciplined expense control, we delivered respectable earnings for the quarter and fiscal 2008," Niblock added. "We have made significant progress in refining our cost structure during the three-year downturn in our industry and have managed our staffing, both in our stores and in our corporate office, to match the slowing sales environment. While we have a conservative plan for 2009, we continue to look critically at all expenses and have the flexibility to further reduce our expense structure should sales be weaker than expected. In the current environment our goal remains to balance expense control with our commitment to customer service."

During the quarter, Lowe's opened 33 new stores. As of January 30, 2009, Lowe's operated 1,649 stores in the United States and Canada representing 186.6 million square feet of retail selling space, a 7.2 percent increase over last year.

A conference call to discuss fourth quarter and fiscal year 2008 operating results is scheduled for today (Friday, February 20) at 9:00 am 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 Year 2008 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until May 17, 2009.

    Lowe's Business Outlook
    First Quarter 2009 (comparisons to first quarter 2008)
    -- The company expects to open approximately 21 new stores reflecting
       square footage growth of approximately 7 percent

    -- Total sales are expected to range from a decline of 3 percent to an
       increase of 1 percent

    -- The company expects comparable store sales to decline 6 to 10 percent

    -- Earnings before interest and taxes as a percentage of sales (operating
       margin) is expected to decline approximately 310 basis points driven by
       payroll, fixed cost and depreciation deleverage

    -- Store opening costs are expected to be approximately $16 million

    -- Diluted earnings per share of $0.23 to $0.27 are expected

    -- Lowe's first quarter ends on May 1, 2009 with operating results to be
       publicly released on Monday, May 18, 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 2 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 170 basis points

    -- Store opening costs are expected to be approximately $50 million

    -- Diluted earnings per share of $1.04 to $1.20 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 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
                                          January 30, 2009   February 1, 2008
    Current Earnings                      Amount   Percent   Amount   Percent

    Net sales                              $9,984  100.00    $10,379  100.00

    Cost of sales                           6,616   66.27      6,759   65.12

    Gross margin                            3,368   33.73      3,620   34.88

    Expenses:

    Selling, general and administrative     2,610   26.15      2,489   23.97

    Store opening costs                        32    0.32         61    0.59

    Depreciation                              397    3.97        370    3.57

    Interest - net                             70    0.70         47    0.45

    Total expenses                          3,109   31.14      2,967   28.58

    Pre-tax earnings                          259    2.59        653    6.30

    Income tax provision                       97    0.97        245    2.37

    Net earnings                             $162    1.62       $408    3.93


    Weighted average shares outstanding -
     basic                                  1,462              1,456

    Basic earnings per share                $0.11              $0.28

    Weighted average shares outstanding -
     diluted                                1,466              1,482

    Diluted earnings per share              $0.11              $0.28

    Cash dividends per share               $0.085             $0.080


    Retained Earnings

    Balance at beginning of period        $17,012            $15,281
    Cumulative effect adjustment (1)            -                  -
    Net earnings                              162                408
    Cash dividends                           (125)              (117)
    Share repurchases                           -               (227)
    Balance at end of period              $17,049            $15,345



                                                     Years Ended
                                         January 30, 2009    February 1, 2008
    Current Earnings                      Amount   Percent   Amount   Percent

    Net sales                             $48,230  100.00    $48,283  100.00

    Cost of sales                          31,729   65.79     31,556   65.36

    Gross margin                           16,501   34.21     16,727   34.64

    Expenses:

    Selling, general and administrative    11,074   22.96     10,515   21.78

    Store opening costs                       102    0.21        141    0.29

    Depreciation                            1,539    3.19      1,366    2.83

    Interest - net                            280    0.58        194    0.40

    Total expenses                         12,995   26.94     12,216   25.30

    Pre-tax earnings                        3,506    7.27      4,511    9.34

    Income tax provision                    1,311    2.72      1,702    3.52

    Net earnings                           $2,195    4.55     $2,809    5.82


    Weighted average shares outstanding -
     basic                                  1,457              1,481

    Basic earnings per share                $1.51              $1.90

    Weighted average shares outstanding -
     diluted                                1,472              1,510

    Diluted earnings per share              $1.49              $1.86

    Cash dividends per share               $0.335             $0.290


    Retained Earnings

    Balance at beginning of period        $15,345          $14,860
    Cumulative effect adjustment (1)            -               (8)
    Net earnings                            2,195            2,809
    Cash dividends                           (491)            (428)
    Share repurchases                           -           (1,888)
    Balance at end of period              $17,049          $15,345


    (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)
                                                    January 30,    February 1,
    Assets                                             2009           2008

     Current assets:
       Cash and cash equivalents                       $245           $281
       Short-term investments (includes $31 million
        of trading securities at January 30, 2009)      416            249

       Merchandise inventory - net                    8,209          7,611
       Deferred income taxes - net                      166            247
       Other current assets                             215            298

       Total current assets                           9,251          8,686

       Property, less accumulated depreciation       22,722         21,361
       Long-term investments                            253            509
       Other assets                                     460            313

       Total assets                                 $32,686        $30,869

    Liabilities and shareholders' equity

     Current liabilities:
       Short-term borrowings                           $987         $1,064
       Current maturities of long-term debt              34             40
       Accounts payable                               4,109          3,713
       Accrued compensation and employee benefits       434            467
       Self-insurance liabilities                       751            671
       Deferred revenue                                 674            717
       Other current liabilities                      1,033          1,079

       Total current liabilities                      8,022          7,751

       Long-term debt, excluding current maturities   5,039          5,576
       Deferred income taxes - net                      660            670
       Other liabilities                                910            774

       Total liabilities                             14,631         14,771

     Shareholders' equity:
       Preferred stock - $5 par value, none issued        -              -
       Common stock - $.50 par value;
          Shares issued and outstanding
          January 30, 2009
          February 1, 2008                              735            729
       Capital in excess of par value                   277             16
       Retained earnings                             17,049         15,345
       Accumulated other comprehensive (loss)
        income                                           (6)             8

       Total shareholders' equity                    18,055         16,098

       Total liabilities and shareholders' equity   $32,686        $30,869



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

                                                           Years Ended
                                                      (Unaudited)
                                                      January 30, February 1,
                                                          2008      2009
    Cash flows from operating activities:
      Net earnings                                       $2,195    $2,809
       Adjustments to reconcile net earnings
        to net cash provided by operating activities:
       Depreciation and amortization                      1,667    1,464
       Deferred income taxes                                 69        2
       Loss on property and other assets                     89       51
       Loss on redemption of long-term debt                   8        -
       Transaction loss from exchange rate changes            3        -
       Share-based payment expense                           95       99
       Changes in operating assets and liabilities:
         Merchandise inventory - net                       (611)    (464)
         Other operating assets                              31      (64)
         Accounts payable                                   402      185
         Other operating liabilities                        174      265
       Net cash provided by operating activities          4,122    4,347

    Cash flows from investing activities:
      Purchases of short-term investments                  (210)    (920)
      Proceeds from sale/maturity of short-term
       investments                                          431    1,183
      Purchases of long-term investments                 (1,148)  (1,588)
      Proceeds from sale/maturity of long-term
       investments                                          994    1,162
      Increase in other long-term assets                    (56)      (7)
      Property acquired                                  (3,266)  (4,010)
      Proceeds from sale of property and
       other long-term assets                                29       57
      Net cash used in investing activities              (3,226)  (4,123)

    Cash flows from financing activities:
      Net (decrease) increase in short-term borrowings      (57)   1,041
      Proceeds from issuance of long-term debt               15    1,296
      Repayment of long-term debt                          (573)     (96)
      Proceeds from issuance of common
       stock under employee stock purchase plan              76       80
      Proceeds from issuance of common
       stock from stock options exercised                    98       69
      Cash dividend payments                               (491)    (428)
      Repurchase of common stock                             (8)  (2,275)
      Excess tax benefits of share-based payments             1        6
      Net cash used in financing activities                (939)    (307)

    Effect of exchange rate changes on cash                   7        -

    Net decrease in cash and cash equivalents               (36)     (83)
    Cash and cash equivalents, beginning of year            281      364
    Cash and cash equivalents, end of year                 $245     $281


SOURCE Lowe's Companies, Inc.


http://www.lowes.com