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News Release

Lowe's Reports Second Quarter Sales and Earnings Results

MOORESVILLE, N.C., Aug. 17 /PRNewswire-FirstCall/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $759 million for the quarter ended July 31, 2009, a 19.1 percent decline from the same period a year ago. Diluted earnings per share declined 19.0 percent to $0.51 from $0.63 in the second quarter of 2008. For the six months ended July 31, 2009, net earnings declined 20.1 percent to $1.23 billion while diluted earnings per share declined 19.2 percent to $0.84.

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

In response to the challenging economic environment, which has resulted in declining demand for home improvement products, the company has re-evaluated its future store expansion plans. For 2010, expansion in North America will be below previously anticipated levels, and new store openings will likely be in the range of 35 to 45. Given this, the company has evaluated the pipeline of potential future store sites and made the decision to no longer pursue several projects. The company's results reflect a pre-tax charge of $48 million for the second quarter primarily related to these projects.

Sales for the quarter declined 4.6 percent to $13.8 billion, down from $14.5 billion in the second quarter of 2008. For the six months ended July 31, 2009, sales declined 3.2 percent to $25.7 billion. Comparable store sales for the second quarter declined 9.5 percent and declined 8.2 percent in the first half of 2009.

"Wavering consumer confidence, unseasonable weather in core markets, and restrained customer spending compared to last year's fiscal stimulus-aided results led to lower than expected sales in the second quarter," commented Robert A. Niblock, Lowe's chairman and CEO. "Cautious consumers remain reluctant to take on discretionary projects until signs of economic improvement are more evident. Despite weak sales, sound execution combined with disciplined inventory management and solid expense control led to reasonable earnings for the quarter, and Lowe's market share gains confirm our competitive position remains strong.

"There are some indications that a bottoming process in housing and the broader economy is under way, and we have seen customer traffic levels stabilize as we benefit from the resurgence of a do-it-yourself home improvement mindset," Niblock added. "As near-term pressures on the consumer remain, we enter the back half of the year with a cautious sales outlook but have the flexibility to react to a quickly changing environment."

During the quarter, Lowe's opened 18 new stores. As of July 31, 2009, Lowe's operated 1,688 stores in the United States and Canada representing 190.8 million square feet of retail selling space, a 6.8 percent increase over last year.

A conference call to discuss second quarter 2009 operating results is scheduled for today (Monday, August 17) at 9:00 am EDT. Please dial 888-817-4020 (international callers dial 706-679-4821) 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 2009 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until November 15, 2009.

    Lowe's Business Outlook

    Third Quarter 2009 (comparisons to third quarter 2008)
    --  The company expects to open approximately 11 new stores reflecting
        square footage growth of approximately 5 percent
    --  Total sales are expected to decline 2 to 5 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 170 basis points driven
        by payroll, fixed cost and depreciation deleverage
    --  Store opening costs are expected to be approximately $11 million
    --  Diluted earnings per share of $0.21 to $0.25 are expected

    --  Lowe's third quarter ends on October 30, 2009 with operating results
        to be publicly released on Monday, November 16, 2009

    Fiscal Year 2009 (comparisons to fiscal year 2008)
    --  The company expects to open 62 to 66 stores in 2009 reflecting total
        square footage growth of approximately 4 percent
    --  Total sales are expected to decline approximately 3 percent
    --  The company expects comparable store sales to decline 7 to 9 percent
    --  Earnings before interest and taxes as a percentage of sales (operating
        margin) is expected to decline approximately 130 basis points
    --  Store opening costs are expected to be approximately $50 million

    --  Diluted earnings per share of $1.13 to $1.21 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 and increasing regulation 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 legislative 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 50 company that serves approximately 14 million customers a week at more than 1,675 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
                                            ----------------------
                                        July 31, 2009       August 1, 2008
    Current Earnings                  Amount    Percent   Amount    Percent
    ----------------                ----------  ------- ----------  -------
    Net sales                          $13,844   100.00    $14,509   100.00

    Cost of sales                        9,021    65.16      9,527    65.66

    Gross margin                         4,823    34.84      4,982    34.34

    Expenses:

    Selling, general and
     administrative                      3,109    22.45      3,014    20.78

    Store opening costs                     14     0.10         21     0.14

    Depreciation                           408     2.95        381     2.63

    Interest - net                          76     0.55         69     0.47

    Total expenses                       3,607    26.05      3,485    24.02

    Pre-tax earnings                     1,216     8.79      1,497    10.32

    Income tax provision                   457     3.31        559     3.86

    Net earnings                          $759     5.48       $938     6.46


    Weighted average common shares
     outstanding - basic                 1,464               1,455

    Basic earnings per common share      $0.51               $0.64

    Weighted average common shares
     outstanding - diluted               1,466               1,470

    Diluted earnings per common share    $0.51               $0.63

    Cash dividends per share            $0.090              $0.085


    Retained Earnings
    -----------------                  -------             -------
    Balance at beginning of period     $17,399             $15,835
    Net earnings                           759                 938
    Cash dividends                        (133)               (125)
    Balance at end of period           $18,025             $16,648



                                               Six Months Ended
                                             --------------------
                                        July 31, 2009       August 1, 2008
    Current Earnings                  Amount    Percent   Amount    Percent
    ----------------                ----------  ------- ----------  -------
    Net sales                          $25,676   100.00    $26,519   100.00

    Cost of sales                       16,658    64.88     17,371    65.50

    Gross margin                         9,018    35.12      9,148    34.50

    Expenses:

    Selling, general and
     administrative                      6,052    23.56      5,738    21.65

    Store opening costs                     27     0.11         38     0.14

    Depreciation                           809     3.15        757     2.85

    Interest - net                         154     0.60        145     0.55

    Total expenses                       7,042    27.42      6,678    25.19

    Pre-tax earnings                     1,976     7.70      2,470     9.31

    Income tax provision                   741     2.89        925     3.49

    Net earnings                        $1,235     4.81     $1,545     5.82


    Weighted average common shares
     outstanding - basic                 1,463               1,454

    Basic earnings per common share      $0.84               $1.06

    Weighted average common shares
     outstanding - diluted               1,465               1,473

    Diluted earnings per common share    $0.84               $1.04

    Cash dividends per share            $0.175              $0.165


    Retained Earnings
    -----------------                  -------             -------
    Balance at beginning of period     $17,049             $15,345
    Net earnings                         1,235               1,545
    Cash dividends                        (259)               (242)
    Balance at end of period           $18,025             $16,648



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

                                       ------------- ------------- ----------
                                        (Unaudited)   (Unaudited)
                                         July 31,      August 1,   January 30,
                                           2009           2008        2009
                                       ------------- ------------- ----------
    Assets

       Current assets:
         Cash and cash equivalents            $1,087          $477     $245
         Short-term investments                  424           377      416
         Merchandise inventory - net           8,189         7,939    8,209
         Deferred income taxes - net             177           275      166
         Other current assets                    216           236      215
                                                 ---           ---      ---

         Total current assets                 10,093         9,304    9,251

         Property, less accumulated
          depreciation                        22,727        22,066   22,722
         Long-term investments                   900           798      253
         Other assets                            462           381      460
                                                 ---           ---      ---

         Total assets                        $34,182       $32,549  $32,686
                                             =======       =======  =======

    Liabilities and shareholders' equity

       Current liabilities:
         Short-term borrowings                    $9          $189     $987
         Current maturities of long-term debt    552            31       34
         Accounts payable                      4,970         4,786    4,109
         Accrued compensation and employee
          benefits                               540           492      434
         Self-insurance liabilities              784           736      751
         Deferred revenue                        716           816      674
         Other current liabilities             1,373         1,478    1,033
                                               -----         -----    -----

         Total current liabilities             8,944         8,528    8,022

         Long-term debt, excluding
          current maturities                   4,515         5,050    5,039
         Deferred income taxes - net             564           641      660
         Other liabilities                       983           824      910
                                                 ---           ---      ---

         Total liabilities                    15,006        15,043   14,631
                                              ------        ------   ------

       Shareholders' equity:
         Preferred stock - $5
          par value, none issued                   -             -        -
         Common stock - $.50 par
          value;
           Shares issued and
            outstanding
             July 31, 2009           1,477
             August 1, 2008          1,464
             January 30, 2009        1,470       738           732      735
         Capital in excess of
          par value                              367           118      277
         Retained earnings                    18,025        16,648   17,049
         Accumulated other
          comprehensive
          income (loss)                           46             8       (6)
                                                  --             -       --

         Total shareholders' equity           19,176        17,506   18,055
                                              ------        ------   ------

         Total liabilities and
          shareholders' equity               $34,182       $32,549  $32,686
                                             =======       =======  =======



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

                                                       ----------------
                                                       Six Months Ended

                                                July 31, 2009  August 1, 2008
                                                -------------  --------------
    Cash flows from operating activities:
        Net earnings                                   $1,235          $1,545
          Adjustments to reconcile net
           earnings to net cash provided by
           operating activities:
            Depreciation and amortization                 870             816
            Deferred income taxes                        (106)            (57)
            Loss on property and other assets              73              30
            Loss on redemption of long-term debt            -               8
            Transaction gain from exchange
             rate changes                                  (1)              -
            Share-based payment expense                    50              54
            Changes in operating assets and
             liabilities:
              Merchandise inventory - net                  32            (328)
              Other operating assets                       20              52
              Accounts payable                            858           1,073
              Other operating liabilities                 685             675
        Net cash provided by operating activities       3,716           3,868

    Cash flows from investing activities:
        Purchases of short-term investments              (166)            (95)
        Proceeds from sale/maturity
         of short-term investments                        314             171
        Purchases of long-term investments               (942)         (1,066)
        Proceeds from sale/maturity
         of long-term investments                         135             565
        Decrease/(increase) in
         other long-term assets                            73             (37)
        Property acquired                              (1,095)         (1,620)
        Proceeds from sale of property
         and other long-term assets                        13              20
        Net cash used in investing activities          (1,668)         (2,062)

    Cash flows from financing activities:
        Net decrease in short-term borrowings            (987)           (873)
        Proceeds from issuance of long-term debt            -              11
        Repayment of long-term debt                       (16)           (555)
        Proceeds from issuance of common stock
         under employee stock purchase plan                37              39
        Proceeds from issuance of common stock
         from stock options exercised                       7              11
        Cash dividend payments                           (259)           (242)
        Repurchase of common stock                          -              (2)
        Excess tax benefits of share-based payments         -               1
        Net cash used in financing activities          (1,218)         (1,610)

    Effect of exchange rate changes on cash                12               -

    Net increase in cash and cash equivalents             842             196
    Cash and cash equivalents, beginning of period        245             281
    Cash and cash equivalents, end of period           $1,087            $477

SOURCE  Lowe's Companies, Inc.
    -0-                           08/17/2009
    /CONTACT:  Shareholders'/Analysts' Inquiries: Paul Taaffe,
+1-704-758-2033, Media Inquiries: Chris Ahearn, +1-704-758-2304, both of
Lowe's/
    /Photo:  http://www.newscom.com/cgi-bin/prnh/20031205/LOWLOGO/
    /Web Site:  http://www.lowes.com /
    (LOW)

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

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