-- Net Earnings Increased 38% -- -- Sales Increased 19% --
WILKESBORO, N.C., Nov. 15-- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported earnings of $168.7 million for the quarter ended October 29, 1999, a 38 percent increase over the same period a year ago. Diluted earnings per share increased 33 percent to $0.44 from $0.33 in the third quarter of 1998. For the nine months ended October 29, 1999, net earnings grew 35 percent to $540.9 million while diluted earnings per share increased 31 percent to $1.41, excluding the one-time charge of $0.04 per share for costs related to the merger with Eagle Hardware & Garden ("Eagle") on April 2, 1999.
Sales for the quarter increased 19 percent to $3.91 billion, up from $3.28 billion in the third quarter of 1998. Sales at the company's comparable stores increased 6.3 percent during the quarter. For the nine months ended October 29, 1999, sales increased 19 percent to $12.12 billion. Comparable store sales increased 6.2 percent in the first nine months of 1999.
As announced last month, Lowe's has elected to change its method of determining the cost of inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. As a result, prior year numbers included in this release have been restated under the FIFO method of accounting in accordance with generally accepted accounting principles. No earnings restatement is needed for the current fiscal year since no LIFO adjustment was incurred this year.
Also, because Lowe's merger with Eagle is accounted for as a pooling of interests, prior year results included in this release have been restated to reflect the combined results of both companies.
"Congratulations to our 80,000+ sales associates who continue to deliver strong performance," said Robert L. Tillman, Lowe's chairman and CEO. "We continue to benefit from the ongoing success and execution of our three key initiatives -- installed sales, special order sales and our focus on the commercial business customer."
"The remainder of 1999 also promises to be an exciting time for Lowe's as we open our first Lowe's stores in California," Tillman added.
The company has also decided to accelerate the integration of Eagle's systems and operations with Lowe's systems and foresees completion of this process in the first quarter of 2000. Because of this accelerated timetable, the results for the current quarter include approximately $8 million of additional expense in SG&A. This accelerated timetable will allow the Eagle stores to begin selling Lowe's branded products in fiscal 2000.
During the quarter, Lowe's opened 13 new stores, relocated 8 stores and closed 1 older, smaller store. The company also closed an Eagle store for remodeling and expects to re-open that store in the fourth quarter. As of October 29, 1999, Lowe's operates 544 stores in 37 states. Retail square footage grew to 52.8 million, a 20 percent increase over the same period a year ago.
This news release may include "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 trends, the availability of real estate for expansion and its successful development, fluctuations in prices and availability of commodities, unanticipated increases in competition with home improvement chains, adverse weather conditions that affect sales, not fully realized cost savings from the Eagle merger, and greater than anticipated costs associated with the integration of the two businesses.