Second Quarter Net Earnings Increased 42 Percent
Second Quarter Comparable Store Sales Increased 6.8 Percent
WILKESBORO, N.C. – Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $467.1 million for the quarter ended August 2, 2002, a 41.9 percent increase over the same period a year ago. Diluted earnings per share increased 40.5 percent to $0.59 from $0.42 in the second quarter of 2001. For the six months ended August 2, 2002, net earnings grew 46.6 percent to $812.9 million while diluted earnings per share increased 43.7 percent to $1.02.
Sales for the quarter increased 22.2 percent to $7.49 billion, up from $6.13 billion in the second quarter of 2001. Comparable store sales for the second quarter increased 6.8 percent. For the six months ended August 2, 2002, sales increased 22.4 percent to $13.96 billion. Comparable store sales increased 7.1 percent in the first half of 2002.
“Our exceptional results in the second quarter signify our focus on serving customers with great stores, innovative merchandising, and dedicated employees, thus driving strong earnings for our shareholders,” commented Robert L. Tillman, Lowe’s chairman and CEO.
“During the quarter, we experienced strong performance across all geographic regions and all product categories,” Tillman continued. “While mixed economic signals make it difficult to develop a comfort level about the overall direction of the economy, our balanced performance, as well as current and continued positive trends in home improvement spending, gives us confidence that the home improvement consumer remains resilient and Lowe’s is positioned to capitalize on a growing home improvement market.”
The company indicated that it will begin accounting for stock options as an expense in its fiscal year beginning February 1, 2003. The company urges the Financial Accounting Standards Board to develop a uniform methodology with regard to valuation of stock options as well as a standard process for companies to follow as they transition to accounting for stock options as an expense.
“Lowe’s has always been dedicated to the highest standards of corporate governance and accountability,” said Tillman. “Expensing stock options will increase investor confidence as well as provide greater visibility into the financial condition of corporate America. However, to ensure that investors will be able to accurately evaluate the impact of stock options across companies and industries, a uniform valuation and transition methodology is needed.”
In addition, Tillman and Executive Vice President and CFO Robert A. Niblock have filed with the Securities and Exchange Commission a certification that the Company’s SEC filings do not contain any untrue statements of material fact or omit any material facts which would make the filings misleading. Details of the certification can be found in the August 15, 2002 Form 8-K filed with the SEC.
During the quarter, Lowe’s opened 22 new stores including one relocation. As of August 2, 2002, Lowe’s operated 806 stores in 43 states representing 88.6 million square feet of retail selling space, a 19.0 percent increase over last year.
A conference call to discuss second quarter 2002 operating results is scheduled for today (Monday, August 19) at 9:00 a.m. EDT. Please dial 719-457-2633 (confirmation code 679750) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe’s website at www.lowes.com and clicking on About Lowe’s, Investor Information, Shareholder Services, Calendar of Events. A replay of the call will be archived on www.lowes.com for seven days.
Lowe’s Business Outlook
This outlook is based on current expectations and includes "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.
Third Quarter 2002 (comparisons to third quarter 2001)
- The company expects to open approximately 20 stores
- Total sales are expected to increase 18 to 19 percent
- The company expects to report a comparable store sales increase of 3 to 5 percent
- Gross margin improvement of 40 to 50 basis points is expected
- The company expects flat to slight de-leverage in SG&A expenses as a percent of sales
- Store opening costs are expected to be approximately $32 million
- The company expects slight leverage in total expenses
- Diluted earnings per share of $0.39 to $0.40 are expected
- Lowe’s third quarter ends on November 1, 2002 with operating results to be publicly released on Monday, November 18, 2002
Fiscal Year 2002 (comparisons to fiscal year 2001)
- The company expects to open 123 stores in 2002 reflecting total square footage growth of 17 to18 percent
- Total sales are expected to increase approximately 20 percent for the year
- The company expects to report a comparable store sales increase of approximately 5 percent
- Gross margin is expected to improve approximately 85 basis points
- Earnings before taxes as a percent of sales are expected to increase by approximately 100 basis points
- Diluted earnings per share of $1.74 to $1.75 are expected for the fiscal year ending January 31, 2003
This news release includes "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 conditions, the availability of real estate for expansion and its successful development, particularly in major metropolitan markets, the availability of sufficient labor to facilitate growth, fluctuations in prices and availability of product, unanticipated impact of competition, legal or regulatory developments, and weather conditions that affect sales.
Lowe's Companies, Inc. is the world’s second largest home improvement retailer. Headquartered in Wilkesboro, N.C., Lowe’s is the 14th largest retailer in the U.S. as well as the 30th largest retailer worldwide. With over 100,000 employees, Lowe’s is Improving Home Improvement for over seven million do-it-yourself retail and commercial business customers each week. For more information, visit lowes.com.