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News Release

Lowe's Reports Record Third Quarter Earnings

  • Net Earnings Increased 24 Percent to $250.5 million
  • Diluted Earnings Per Share Increased 23 Percent to $0.32
  • Third Quarter Comparable Store Sales Increased 4 Percent
  • WILKESBORO, N.C., Nov. 19 -- Lowe's Companies, Inc. (NYSE: LOW - news), the world's second largest home improvement retailer, today reported net earnings of $250.5 million for the quarter ended November 2, 2001, a 23.8 percent increase over the same period a year ago. Diluted earnings per share increased 23.1 percent to $0.32 from $0.26 in the third quarter of 2000. For the nine months ended November 2, 2001, net earnings grew 20.3 percent to $804.9 million while diluted earnings per share increased 17.2 percent to $1.02.

    Sales for the quarter increased 21.1 percent to $5.45 billion, up from $4.50 billion in the third quarter of 2000. Comparable store sales for the third quarter increased by 4.0 percent. For the nine months ended November 2, 2001, sales increased 18.4 percent to $16.86 billion. Comparable store sales increased 0.9 percent in the first nine months of 2001.

    "These results give us confidence in the resiliency of the American consumer," commented Robert L. Tillman, Lowe's chairman, president and CEO. "This quarter we experienced solid sales performance in all geographic regions and all product categories with customer traffic accelerating at a rapid pace during the quarter. I am confident that our focus on the fundamentals of controlling expenses, managing inventory and providing exceptional customer service will continue to drive strong performance."

    During the quarter, Lowe's opened 35 new stores and relocated 4 stores. One older, smaller store was closed. As of November 2, 2001, Lowe's operated 734 stores in 42 states representing 78.9 million square feet, a 23.7% increase over last year.

    A conference call to discuss third quarter 2001 operating results is scheduled for today (Monday, November 19) at 9:00 a.m. EDT. Please dial 719- 457-2633 (confirmation code 742663) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe's website at http://www.lowes.com and clicking on About Lowe's, Investor Information, Earnings Releases. A replay of the call will be archived on http://www.lowes.com for 7 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.

    Fourth Quarter 2001 (13 weeks ending February 1, 2002 vs. 14 weeks ending February 2, 2001)

    • The company expects to open 16 stores
    • Total sales are expected to increase by approximately 14 percent for the 13 week period ending February 1, 2002 versus the 14 week period ending February 2, 2001
    • The company expects to report comparable store sales of 3 to 5 percent
    • Gross margin improvement of 25 to 35 basis points is expected
    • The company expects SG&A expense leverage of 10 to 20 basis points as a percent of sales
    • Store opening costs are expected to be approximately $35 to $40 million
    • Total expense leverage of 10 to 20 basis points is expected
    • Diluted earnings per share of $0.22 to $0.24 are expected
    • Lowe's fourth quarter ends on February 1, 2002 with operating results to be publicly released on Monday, February 25, 2002
    Fiscal Year 2001 (52 weeks ending February 1, 2002 vs. 53 weeks ending February 2, 2001)

    • The company expects to open 115 stores in 2001 reflecting total 2001 square footage growth of 19 percent
    • Total sales are expected to increase approximately 17 to 18 percent for the 52 weeks in 2001 versus the 53 weeks in 2000
    • The company expects to report a comparable store sales increase of approximately 2 percent
    • Gross margin is expected to improve 30 to 40 basis points
    • Operating margin, defined as pre-tax earnings plus store opening costs and interest expense, is expected to increase by 30 to 40 basis points
    • Diluted earnings per share of $1.24 to $1.26 are expected for the fiscal year ending February 1, 2002

    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 six million do-it-yourself retail and commercial business customers each week. For more information, visit lowes.com.

    Three Months Ended
    
                                             November 2, 2001    October 27, 2000
    
        Current Earnings                     Amount    Percent   Amount   Percent

    Net sales $5,454,534 100.00 $4,504,141 100.00 Cost of sales 3,863,645 70.83 3,204,769 71.15 Gross margin 1,590,889 29.17 1,299,372 28.85 Expenses: Selling, general and administrative 973,036 17.84 809,427 17.97 Store opening costs 42,766 0.78 37,161 0.83 Depreciation 134,054 2.46 104,681 2.32 Interest 43,419 0.80 28,021 0.62 Total expenses 1,193,275 21.88 979,290 21.74 Pre-tax earnings 397,614 7.29 320,082 7.11 Income tax provision 147,117 2.70 117,789 2.62 Net earnings $250,497 4.59 $202,293 4.49

    Shares outstanding - Basic 773,351 765,681 Basic earnings per share $0.32 $0.26 Shares outstanding - Diluted 795,639 768,750 Diluted earnings per share $0.32 $0.26

    Retained Earnings Balance at beginning of period $4,043,810 $3,201,989 Net earnings 250,497 202,293 Cash dividends (15,468) (13,368) Balance at end of period $4,278,839 $3,390,914

    Lowe's Companies, Inc. Consolidated Statements of Current and Retained Earnings (Unaudited) In Thousands, Except Per Share Data

    Nine Months Ended November 2, 2001 October 27, 2000 Current Earnings Amount Percent Amount Percent Net sales $16,857,625 100.00 $14,235,507 100.00 Cost of sales 12,055,499 71.51 10,235,992 71.90 Gross margin 4,802,126 28.49 3,999,515 28.10 Expenses: Selling, general and administrative 2,912,487 17.28 2,473,187 17.37 Store opening costs 107,028 0.63 90,798 0.64 Depreciation 377,703 2.24 296,664 2.08 Interest 127,359 0.76 80,258 0.57 Total expenses 3,524,577 20.91 2,940,907 20.66 Pre-tax earnings 1,277,549 7.58 1,058,608 7.44 Income tax provision 472,689 2.81 389,567 2.74 Net earnings $804,860 4.77 $669,041 4.70

    Shares outstanding - Basic 771,145 765,382 Basic earnings per share $1.04 $0.87 Shares outstanding - Diluted 792,808 768,880 Diluted earnings per share $1.02 $0.87

    Retained Earnings Balance at beginning of period $3,518,356 $2,761,964 Net earnings 804,860 669,041 Cash dividends (44,377) (40,091) Balance at end of period $4,278,839 $3,390,914

    Lowe's Companies, Inc. Consolidated Balance Sheets In Thousands

    (Unaudited) (Unaudited) November 2, October 27, February 2, 2001 2000 2001 Assets Current assets: Cash and cash equivalents $610,543 $128,746 $455,658 Short-term investments 24,767 10,706 12,871 Accounts receivable - net 197,771 173,784 160,985 Merchandise inventory 3,905,859 3,500,202 3,285,370 Deferred income taxes 93,210 69,000 81,044 Other assets 229,578 173,955 161,498

    Total current assets 5,061,728 4,056,393 4,157,426

    Property, less accumulated depreciation 8,279,838 6,439,167 7,034,960 Long-term investments 25,876 37,213 34,690 Other assets 164,531 130,794 131,091

    Total assets $13,531,973 $10,663,567 $11,358,167

    Liabilities and Shareholders' Equity

    Current liabilities: Short-term borrowings $-- $248,402 $249,829 Current maturities of long- term debt 50,333 42,160 42,341 Accounts payable 1,895,822 1,786,577 1,714,370 Employee retirement plans 92,795 89,015 75,656 Accrued salaries and wages 170,090 179,406 166,392 Other current liabilities 823,098 529,633 662,410

    Total current liabilities 3,032,138 2,875,193 2,910,998

    Long-term debt, excluding current maturities 3,787,138 2,209,806 2,697,669 Deferred income taxes 290,129 228,456 251,450 Other long-term liabilities 3,248 3,882 3,165

    Total liabilities 7,112,653 5,317,337 5,863,282

    Shareholders' equity: Preferred stock - $5 par value, none issued -- -- -- Common stock - $.50 par value; Issued and Outstanding November 2, 2001 773,752 October 27, 2001 765,724 February 2, 2001 766,484 386,876 382,862 383,242 Capital in excess of par 1,753,283 1,577,419 1,595,148 Retained earnings 4,278,839 3,390,914 3,518,356 Unearned compensation- restricted stock awards (485) (4,876) (2,312) Accumulated other comprehensive income (loss) 807 (89) 451

    Total shareholders' equity 6,419,320 5,346,230 5,494,885

    Total liabilities and shareholders' equity $13,531,973 $10,663,567 $11,358,167

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

    For the Nine Months Ended November 2, October 27, Periods Ended On 2001 2000 Cash Flows From Operating Activities: Net Earnings $804,860 $669,041 Adjustments to Reconcile Net Earnings to Net Cash Provided By Operating Activities: Depreciation and Amortization 389,863 297,234 Deferred Income Taxes 26,320 12,642 Loss on Disposition/Writedown of Fixed and Other Assets 28,071 20,281 Tax Effect of Stock Options Exercised 25,852 5,196 Changes in Operating Assets and Liabilities: Accounts Receivable - Net (36,786) (25,883) Merchandise Inventory (620,489) (687,841) Other Operating Assets (68,071) (68,387) Accounts Payable 181,452 225,197 Employee Retirement Plans 80,580 (12,998) Other Operating Liabilities 165,933 150,712 Net Cash Provided by Operating Activities 977,585 585,194

    Cash Flows from Investing Activities: (Increase) Decrease in Investment Assets: Short-Term Investments (3,382) 75,288 Purchases of Long-Term Investments (1,030) (13,957) Proceeds from Sale/Maturity of Long-Term Investments 1,878 -- Increase in Other Long-Term Assets (34,743) (30,964) Fixed Assets Acquired (1,674,365) (1,614,455) Proceeds from the Sale of Fixed and Other Long-Term Assets 34,675 46,389 Net Cash Used in Investing Activities (1,676,967) (1,537,699)

    Cash Flows from Financing Activities: Net (Decrease) Increase in Short-Term Borrowings (249,829) 155,927 Long-Term Debt Borrowings 1,111,360 519,402 Repayment of Long-Term Debt (35,725) (54,493) Proceeds from Employee Stock Purchase Plan 16,176 -- Proceeds from Stock Options Exercised 56,662 9,384 Cash Dividend Payments (44,377) (40,091) Net Cash Provided by Financing Activities 854,267 590,129

    Net Increase (Decrease) in Cash and Cash Equivalents 154,885 (362,376) Cash and Cash Equivalents, Beginning of Period 455,658 491,122 Cash and Cash Equivalents, End of Period $610,543 $128,746S