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News Release

Lowe's Reports Record Second Quarter Earnings

  • Net Earnings Increased 18 Percent to $329 million
  • Diluted Earnings Per Share Increased 17 Percent to $0.42
  • Second Quarter Sales Increased 16 Percent

WILKESBORO, N.C., Aug. 20 -- Lowe's Companies, Inc. (NYSE: LOW - news), the world's second largest home improvement retailer, today reported net earnings of $329.1 million for the quarter ended August 3, 2001, a 17.7 percent increase over the same period a year ago. Diluted earnings per share increased 16.7 percent to $0.42 from $0.36 in the second quarter of 2000. For the six months ended August 3, 2001, net earnings grew 18.8 percent to $554.4 million while diluted earnings per share increased 16.4 percent to $0.71.

Sales for the quarter increased 16.4 percent to $6.13 billion, up from $5.26 billion in the second quarter of 2000. Comparable store sales for the second quarter increased by 1.7 percent. For the six months ended August 3, 2001, sales increased 17.2 percent to $11.40 billion. Comparable store sales decreased 0.5 percent in the first six months of 2001.

"Lowe's sales growth and earnings performance was driven by strong increases in categories such as appliances, where Lowe's continues to gain market share at a rapid pace," explained Robert L. Tillman, Lowe's chairman and CEO. "We also saw solid trends in sales of paint, millwork and flooring, in spite of a difficult economic environment.

"While we remain cautious about the economy, the improvement we experienced during the quarter supports our second half guidance as reflected in Lowe's Business Outlook," added Tillman.

All diluted earnings per share numbers contained in this release reflect the company's two-for-one stock split effective July 2, 2001.

During the quarter, Lowe's opened 21 new stores and relocated 2 stores. One older, smaller store was closed. As of August 3, 2001, Lowe's operated 700 stores in 40 states representing 74.5 million square feet, a 22.3% increase over last year.

A conference call to discuss second quarter 2001 operating results is scheduled for today (Monday, August 20) at 9:00 a.m. EDT. Please dial 719-457-2633 (confirmation code 428374) 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, Earnings Releases. A replay of the call will be archived on www.lowes.com for 48 hours.

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 2001 (comparisons to third quarter 2000)
  • The company expects to open 35 to 38 stores
  • Total sales are expected to increase by approximately 20 percent
  • The company expects to report comparable store sales of 2 to 4 percent
  • Gross margin improvement of 10 to 20 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 expenses are expected to remain essentially flat as a percent of sales
  • Diluted earnings per share of $0.30 to $0.32 are expected
  • Lowe's third quarter ends on November 2, 2001 with operating results to be publicly released on Monday, November 19, 2001

Fiscal Year 2001 (comparisons to fiscal year 2000)

  • 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 20 to 30 basis points
  • Operating margin, defined as pre-tax earnings plus store opening costs and interest expense, is expected to increase by 20 to 30 basis points
  • Diluted earnings per share of $1.23 to $1.25 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 34th largest retailer worldwide. With over 100,000 employees, Lowe's is Improving Home Improvement for nearly five million do-it-yourself retail and commercial business customers each week. For more information, or product, visit or shop us at lowes.com.

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

Three Months Ended
                                          August 3, 2001        July 28, 2000
    Current Earnings                     Amount    Percent    Amount  Percent

    Net sales                         $ 6,126,726  100.00 $ 5,264,252  100.00

    Cost of sales                       4,409,018   71.96   3,812,225   72.42

    Gross margin                        1,717,708   28.04   1,452,027   27.58

    Expenses:

    Selling, general and
     administrative                       999,706   16.32     857,052   16.28

    Store opening costs                    28,470    0.46      27,852    0.53

    Depreciation                          124,571    2.03      98,495    1.87

    Interest                               42,614    0.70      26,224    0.50

    Total expenses                      1,195,361   19.51   1,009,623   19.18

    Pre-tax earnings                      522,347    8.53     442,404    8.40

    Income tax provision                  193,264    3.16     162,805    3.09

    Net earnings                      $   329,083    5.37 $   279,599    5.31


    Shares outstanding - Basic            771,667             765,458

    Basic earnings per share          $      0.43         $      0.37

    Shares outstanding - Diluted          795,087             768,740

    Diluted earnings per share        $      0.42         $      0.36


    Retained Earnings
    Balance at beginning of period    $ 3,730,174         $ 2,935,756
    Net earnings                          329,083             279,599
    Cash dividends                        (15,447)            (13,366)
    Balance at end of period          $ 4,043,810         $ 3,201,989


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

                                                 Six Months Ended
                                         August 3, 2001        July 28, 2000
    Current Earnings                     Amount    Percent    Amount   Percent

    Net sales                        $ 11,403,091  100.00 $ 9,731,366  100.00

    Cost of sales                       8,191,854   71.84   7,031,223   72.25

    Gross margin                        3,211,237   28.16   2,700,143   27.75

    Expenses:

    Selling, general and
     administrative                     1,939,451   17.01   1,663,760   17.10

    Store opening costs                    64,262    0.56      53,637    0.55

    Depreciation                          243,649    2.14     191,983    1.97

    Interest                               83,940    0.73      52,237    0.54

    Total expenses                      2,331,302   20.44   1,961,617   20.16

    Pre-tax earnings                      879,935    7.72     738,526    7.59

    Income tax provision                  325,572    2.86     271,778    2.79

    Net earnings                      $   554,363    4.86 $   466,748    4.80


    Shares outstanding - Basic            770,042             765,234

    Basic earnings per share          $      0.72         $      0.61

    Shares outstanding - Diluted          791,282             769,104

    Diluted earnings per share        $      0.71         $      0.61


    Retained Earnings
    Balance at beginning of period    $ 3,518,356         $ 2,761,964
    Net earnings                          554,363             466,748
    Cash dividends                        (28,909)            (26,723)
    Balance at end of period          $ 4,043,810         $ 3,201,989


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

                                          (Unaudited)  (Unaudited)
                                           August 3,    July 28,   February 2,
                                             2001         2000         2001
    Assets

     Current assets:
     Cash and cash equivalents          $   629,293  $   570,233  $   455,658
     Short-term investments                  36,408       11,272       12,871
     Accounts receivable - net              213,430      183,749      160,985
     Merchandise inventory                3,651,191    3,167,436    3,285,370
     Deferred income taxes                   98,508       59,077       81,044
     Other assets                           216,241      185,528      161,498

     Total current assets                 4,845,071    4,177,295    4,157,426

     Property, less accumulated
      depreciation                        7,829,205    5,932,792    7,034,960
     Long-term investments                   30,985       37,500       34,690
     Other assets                           162,131       94,992      131,091

     Total assets                       $12,867,392  $10,242,579  $11,358,167

    Liabilities and Shareholders' Equity

     Current liabilities:
     Short-term borrowings              $   100,000  $   100,000  $   249,829
     Current maturities of long-term
      debt                                   43,993       41,905       42,341
     Accounts payable                     1,910,317    1,691,471    1,714,370
     Employee retirement plans               90,279       63,347       75,656
     Accrued salaries and wages             181,197      138,060      166,392
     Other current liabilities              820,145      624,008      662,410

     Total current liabilities            3,145,931    2,658,791    2,910,998

     Long-term debt, excluding
      current maturities                  3,291,605    2,217,006    2,697,669
     Deferred income taxes                  273,382      210,988      251,450
     Other long-term liabilities              3,220        3,858        3,165

     Total liabilities                    6,714,138    5,090,643    5,863,282

     Shareholders' equity:
      Preferred stock - $5 par
       value, none issued                        --           --           --
      Common stock - $.50 par value;
       Issued and Outstanding
       August 3, 2001     772,749
       July 28, 2000      765,574
       February 2, 2001   766,484           386,374      382,786      383,242
      Capital in excess of par            1,723,515    1,574,927    1,595,148
      Retained earnings                   4,043,810    3,201,989    3,518,356
      Unearned compensation-
       restricted stock awards               (1,067)      (7,580)      (2,312)
      Accumulated other
       comprehensive income (loss)              622         (186)         451

     Total shareholders' equity           6,153,254    5,151,936    5,494,885

     Total liabilities and
      shareholders' equity              $12,867,392  $10,242,579  $11,358,167


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

                                                    For the Six Months Ended
                                                   August 3,        July 28,
    Periods Ended On                                2001              2000
    Cash Flows From Operating Activities:
      Net Earnings                                $ 554,363        $ 466,748
      Adjustments to Reconcile Net Earnings to
       Net Cash Provided By Operating Activities:
        Depreciation and
         Amortization                               251,539          192,336
        Deferred Income Taxes                         4,375            5,106
        Loss on Disposition/Writedown of
         Fixed and Other Assets                      27,196           15,813
        Tax Effect of Stock Options Exercised        24,138            3,756
        Changes in Operating Assets
         and Liabilities:
          Accounts Receivable - Net                 (52,445)         (35,848)
          Merchandise Inventory                    (365,821)        (355,075)
          Other Operating Assets                    (54,743)         (58,067)
          Accounts Payable                          195,947          124,525
          Employee Retirement Plans                  54,273          (38,667)
          Other Operating Liabilities               173,543          201,644
    Net Cash Provided by Operating Activities       812,365          522,271

    Cash Flows from Investing Activities:
      (Increase) Decrease in
        Investment Assets:
         Short-Term Investments                     (19,990)          71,045
         Purchases of Long-Term
          Investments                                  (979)         (10,673)
         Proceeds from Sale/Maturity of
          Long-Term Investments                       1,400               --
       Increase in Other Long-Term
        Assets                                      (50,143)         (21,494)
       Fixed Assets Acquired                     (1,063,863)        (974,317)
       Proceeds from the Sale of Fixed and
        Other Long-Term Assets                       22,933           31,780
       Net Cash Used in Investing Activities     (1,110,642)        (903,659)

    Cash Flows from Financing Activities:
      Net Increase (Decrease) in Short-Term
       Borrowings                                  (149,829)           7,525
      Long-Term Debt Borrowings                     611,392          519,912
      Repayment of Long-Term Debt                   (28,751)         (47,840)
      Proceeds from Employee Stock Purchase Plan     16,176               --
      Proceeds from Stock Options Exercised          51,833            7,625
      Cash Dividend Payments                        (28,909)         (26,723)
      Net Cash Provided by Financing Activities     471,912          460,499

    Net Increase in Cash and Cash Equivalents       173,635           79,111
    Cash and Cash Equivalents, Beginning
     of Period                                      455,658          491,122
    Cash and Cash Equivalents, End of
     Period                                       $ 629,293        $ 570,233