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News Release

Lowe's Reports Record Second Quarter Earnings
           -- Second Quarter Total Sales Increased 17.3 Percent --

      -- Second Quarter Comparable Store Sales Increased 5.1 Percent --

MOORESVILLE, N.C., Aug. 16 /PRNewswire-FirstCall/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $704 million for the quarter ended July 30, 2004, a 17.9 percent increase over the same period a year ago. Diluted earnings per share increased 18.7 percent to $0.89 from $0.75 in the second quarter of 2003. For the six months ended July 30, 2004, net earnings grew 14 percent to $1.16 billion while diluted earnings per share increased 14.2 percent to $1.45.

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

Sales for the quarter increased 17.3 percent to $10.2 billion, up from $8.7 billion in the second quarter of 2003. Comparable store sales for the second quarter increased 5.1 percent. For the six months ended July 30, 2004, sales increased 19.4 percent to $18.9 billion. Comparable store sales increased 7.2 percent in the first half of 2004.

"Robust housing turnover, record home ownership, attractive mortgage rates and improving consumer confidence highlighted a solid performance in the second quarter where our stores delivered record earnings," explained Robert L. Tillman, Lowe's chairman and CEO. "A strong and vibrant housing market, combined with the commitment of our employees to provide excellent customer service, are the foundations for our confidence in the future."

"Following a solid start to the quarter, sales weakened in June as several factors, including adverse weather in many parts of the country, impacted consumers' ability to initiate typical late spring and early summer projects," said Lowe's President Robert A. Niblock. "Sales rebounded in July, and we were pleased with the direction of business as the quarter concluded. We continue to invest in our stores and enhance displays with product resets, ensuring a great shopping environment for our customers. As our merchants continue to drive innovation and our stores provide excellent service, we're confident that we have the programs in place to deliver strong results in the second half of 2004."

During the quarter, Lowe's opened 20 new stores including 3 relocations. As of July 30, 2004, Lowe's operated 997 stores in 45 states representing 113.8 million square feet of retail selling space, a 14.2 percent increase over last year.

A conference call to discuss second quarter 2004 operating results is scheduled for today (Monday, August 16) at 9:00 a.m. EDT. Please dial 888-817-4020 (international callers dial 706-679-6090) 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/investor and clicking on Lowe's Second Quarter 2004 Earnings Conference Call Webcast. A replay of the call will be archived on 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 the Private Securities Litigation Reform Act of 1995. Although the company currently 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 2004 (comparisons to third quarter 2003)
     * The company expects to open 33 stores reflecting square footage growth
       of approximately 13 percent
     * Total sales are expected to increase approximately 15 percent
     * The company expects to report a comparable store sales increase of 3 to
       4 percent
     * Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to remain approximately flat to last year as a percent of
       sales
     * Store opening costs are expected to be approximately $35 million
     * Diluted earnings per share of $0.65 to $0.66 are expected
     * Lowe's third quarter ends on October 29, 2004 with operating results to
       be publicly released on Monday, November 15, 2004

    Fiscal Year 2004 (comparisons to fiscal year 2003)
     * The company expects to open 140 stores in 2004 reflecting total square
       footage growth of approximately 14 percent
     * Total sales are expected to increase approximately 18 percent for the
       year
     * The company expects to report a comparable store sales increase of
       approximately 6 percent
     * Including the estimated 60 basis point negative impact of EITF 02-16,
       operating margin (defined as gross margin less SG&A and depreciation)
       is expected to decline 25 to 35 basis points
     * Store opening costs are expected to be approximately $128 million
     * Including the estimated $0.16 impact of EITF 02-16, diluted earnings
       per share of $2.69 to $2.71 are expected for the fiscal year ending
       January 28, 2005.  Excluding the impact of the accounting change,
       diluted earnings per share of $2.85 to $2.87 would be expected.  Our
       presentation of this measure is intended to allow investors to compare
       our projected fiscal 2004 performance with that in fiscal 2003.

This news release includes "forward-looking statements" within the meaning the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the Company's expectations for sales growth, earnings and performance, capital expenditures, store openings, 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, fluctuations in and the overall condition of the U.S. economy, environment affecting new store development, the Company's ability to attract, train, and retain highly-qualified personnel, stability of costs and availability of sourcing channels, the Company's ability to manage its growth and respond to competition, impact of regulatory and legal matters, and the Company's ability to absorb lost sales resulting from unanticipated weather conditions. Additional information regarding these and other risks and uncertainties are provided in our periodic filings with the Securities and Exchange Commission. 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 2003 sales of $30.8 billion, Lowe's Companies, Inc. is a FORTUNE 50 company that serves approximately 10 million customers a week at more than 975 home improvement stores in 45 states. In 2004, FORTUNE named Lowe's America's Most Admired Specialty Retailer for a second consecutive year. Based in Mooresville, N.C., the 58-year old company 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 30, 2004    August 1, 2003
    Current Earnings                        Amount  Percent   Amount  Percent

    Net sales                              $10,169   100.00   $8,666   100.00

    Cost of sales                            6,780    66.68    6,040    69.70

    Gross margin                             3,389    33.32    2,626    30.30

    Expenses:

    Selling, general and administrative      1,967    19.34    1,416    16.34

    Store opening costs                         18     0.17       27     0.31

    Depreciation                               216     2.13      184     2.12

    Interest                                    45     0.44       45     0.52

    Total expenses                           2,246    22.08    1,672    19.29

    Pre-tax earnings                         1,143    11.24      954    11.01

    Income tax provision                       439     4.32      360     4.16

    Earnings from continuing operations        704     6.92      594     6.85

    Earnings from discontinued operations,
     net of tax                                  -     0.00        3     0.04

    Net earnings                              $704     6.92     $597     6.89

    Weighted average shares outstanding -
     Basic                                     776               784

    Basic Earnings Per Share
    Continuing operations                    $0.91             $0.76
    Discontinued operations                    -                 -
    Basic earnings per share                 $0.91             $0.76

    Weighted average shares outstanding -
     Diluted                                   796               804

    Diluted Earnings Per Share
    Continuing operations                    $0.89             $0.75
    Discontinued operations                    -                 -
    Diluted earnings per share               $0.89             $0.75

    Retained Earnings
    Balance at beginning of period          $8,109            $6,288
    Net earnings                               704               597
    Cash dividends                             (31)              (20)
    Balance at end of period                $8,782            $6,865


    Lowe's Companies, Inc.
    Consolidated Statements of Current and Retained Earnings (Unaudited)
    In Millions, Except Per Share Data
                                                  Six Months Ended
                                            July 30, 2004   August 1, 2003
    Current Earnings                       Amount Percent   Amount Percent

    Net sales                             $18,850  100.00  $15,784  100.00

    Cost of sales                          12,591   66.80   10,939   69.30

    Gross margin                            6,259   33.20    4,845   30.70

    Expenses:

    Selling, general and administrative     3,821   20.27    2,715   17.20

    Store opening costs                        39    0.21       46    0.29

    Depreciation                              424    2.25      363    2.30

    Interest                                   93    0.49       93    0.59

    Total expenses                          4,377   23.22    3,217   20.38

    Pre-tax earnings                        1,882    9.98    1,628   10.32

    Income tax provision                      723    3.83      615    3.90

    Earnings from continuing operations     1,159    6.15    1,013    6.42

    Earnings from discontinued operations,
     net of tax                                 -    0.00        4    0.03

    Net earnings                           $1,159    6.15   $1,017    6.45

    Weighted average shares outstanding -
     Basic                                    781              783

    Basic Earnings Per Share
    Continuing operations                   $1.48            $1.30
    Discontinued operations                     -                -
    Basic earnings per share                $1.48            $1.30

    Weighted average shares outstanding -
     Diluted                                  802              803

    Diluted Earnings Per Share
    Continuing operations                   $1.45            $1.27
    Discontinued operations                   -                -
    Diluted earnings per share              $1.45            $1.27

    Retained Earnings
    Balance at beginning of period         $7,677           $5,887
    Net earnings                            1,159            1,017
    Cash dividends                            (54)             (39)
    Balance at end of period               $8,782           $6,865


    Lowe's Companies, Inc.
    Consolidated Statements of Earnings, Actual and Pro Forma (Unaudited)
    In Millions, Except Per Share Data
                                                  Three Months Ended

                                                    Pro    Pro Forma
                                            Actual  Forma  Adjusted*   Actual
                                           July 30, Adjust- July 30, August 1,
    Current Earnings                          2004  ments*     2004      2003

    Net sales                              $10,169      $-   $10,169   $8,666
    Cost of sales                            6,780     314     7,094    6,040
    Gross margin                             3,389    (314)    3,075    2,626
    Expenses:
    Selling, general and administrative      1,967    (322)    1,645    1,416
    Store opening costs                         18       -        18       27
    Depreciation                               216       -       216      184
    Interest                                    45       -        45       45
    Total expenses                           2,246    (322)    1,924    1,672
    Pre-tax earnings                         1,143       8     1,151      954
    Income tax provision                       439       3       442      360
    Earnings from continuing operations        704       5       709      594
    Earnings from discontinued operations,
     net of tax                                  -       -         -        3
    Net earnings                              $704      $5      $709     $597

    Shares outstanding - Basic                 776     776       776      784
    Basic earnings per share:
    Continuing operations                    $0.91   $0.01     $0.92    $0.76
    Discontinued operations                      -       -         -        -
    Basic earnings per share                 $0.91   $0.01     $0.92    $0.76

    Shares outstanding - Diluted               796     796       796      804
    Diluted earnings per share:
    Continuing operations                    $0.89   $0.01     $0.90    $0.75
    Discontinued operations                      -       -         -        -
    Diluted earnings per share               $0.89   $0.01     $0.90    $0.75

     *: Reflects the impact of EITF 02-16 on the Consolidated Statement of
        Earnings for the three months ended July 30, 2004.


                                                  Six Months Ended

                                                   Pro    Pro Forma
                                          Actual   Forma  Adjusted* Actual
                                         July 30,  Adjust- July 30, August 1,
    Current Earnings                        2004   ments*    2004   2003

    Net sales                             $18,850     $-  $18,850  $15,784
    Cost of sales                          12,591    417   13,008   10,939
    Gross margin                            6,259   (417)   5,842    4,845
    Expenses:
    Selling, general and administrative     3,821   (630)   3,191    2,715
    Store opening costs                        39      -       39       46
    Depreciation                              424      -      424      363
    Interest                                   93      -       93       93
    Total expenses                          4,377   (630)   3,747    3,217
    Pre-tax earnings                        1,882    213    2,095    1,628
    Income tax provision                      723     82      805      615
    Earnings from continuing operations     1,159    131    1,290    1,013
    Earnings from discontinued operations,
     net of tax                                 -      -        -        4
    Net earnings                           $1,159   $131   $1,290   $1,017

    Shares outstanding - Basic                781    781      781      783
    Basic earnings per share:
    Continuing operations                   $1.48  $0.17    $1.65    $1.30
    Discontinued operations                   -      -        -        -
    Basic earnings per share                $1.48  $0.17    $1.65    $1.30

    Shares outstanding - Diluted              802    802      802      803
    Diluted earnings per share:
    Continuing operations                   $1.45  $0.16    $1.61    $1.27
    Discontinued operations                   -      -        -        -
    Diluted earnings per share              $1.45  $0.16    $1.61    $1.27

     *: Reflects the impact of EITF 02-16 on the Consolidated Statement of
        Earnings for the six months ended July 30, 2004.


    Lowe's Companies, Inc.
    Consolidated Balance Sheets
    In Millions, Except Par Value Data
                                             (Unaudited)(Unaudited)
                                                July 30, August 1, January 30,
                                                   2004     2003     2004
    Assets

       Current assets:
         Cash and cash equivalents                 $840   $1,550   $1,446
         Short-term investments                     191      137      178
         Accounts receivable - net                   38      199      131
         Merchandise inventory                    5,272    4,652    4,584
         Deferred income taxes                       80       67       59
         Other assets                                81       66      121

         Total current assets                     6,502    6,671    6,519

         Property, less accumulated depreciation 12,858   10,955   11,945
         Long-term investments                      155      116      169
         Other assets                               217      172      241

         Total assets                           $19,732  $17,914  $18,874

    Liabilities and Shareholders' Equity

       Current liabilities:
         Current maturities of long-term debt       $34      $73      $77
         Accounts payable                         2,471    2,468    2,227
         Accrued salaries and wages                 250      246      335
         Other current liabilities                1,978    1,526    1,561

         Total current liabilities                4,733    4,313    4,200

         Long-term debt, excluding current
          maturities                              3,664    3,684    3,678
         Deferred income taxes                      726      524      657
         Other long-term liabilities                 62       20       30

         Total liabilities                        9,185    8,541    8,565

       Shareholders' equity:
         Preferred stock - $5 par value,
          none issued                                 -        -        -
         Common stock - $.50 par value;
          Shares Issued and Outstanding
            July 30, 2004                772
            August 1, 2003               785
            January 30, 2004             787        386      392      394
         Capital in excess of par                 1,380    2,116    2,237
         Retained earnings                        8,782    6,865    7,677
         Accumulated other comprehensive income      (1)       -        1

         Total shareholders' equity              10,547    9,373   10,309

         Total liabilities and shareholders'
          equity                                $19,732  $17,914  $18,874


    Lowe's Companies, Inc.
    Consolidated Statements of Cash Flows (Unaudited)
    In Millions
                                                        Six Months Ended
                                                    July 30,         August 1,
                                                      2004              2003
    Cash flows from operating activities:
      Net earnings                                  $1,159            $1,017
      Earnings from discontinued operations,
       net of tax                                        -                (4)
      Earnings from continuing operations            1,159             1,013

         Adjustments to reconcile net earnings from
          continuing operations to net cash provided
          by operating activities:
             Depreciation and amortization             433               373
             Deferred income taxes                      48                37
             Loss on disposition/writedown of
              fixed and other assets                    10                15
             Stock-based compensation expense           41                15
             Tax effect of stock options exercised      12                10
             Changes in operating assets and
              liabilities:
               Accounts receivable - net                93               (22)
               Merchandise inventory                  (688)             (683)
               Other operating assets                   40                46
               Accounts payable                        244               661
               Other operating liabilities             364               219
         Net cash provided by operating activities
          from continuing operations                 1,756             1,684

    Cash flows from investing activities:
         Decrease (Increase) in investment assets:
            Short-term investments                      71               192
            Purchases of long-term investments         (78)             (247)
            Proceeds from sale/maturity of long-term
             investments                                 6                99
         Increase in other long-term assets            (21)              (28)
         Fixed assets acquired                      (1,370)           (1,010)
         Proceeds from the sale of fixed and other
          long-term assets                              68                44
         Net cash used in investing activities
          from continuing operations                (1,324)             (950)

    Cash flows from financing activities:
         Net decrease in short-term borrowings           -               (50)
         Repayment of long-term debt                   (60)              (17)
         Proceeds from employee stock purchase plan     30                25
         Proceeds from stock options exercised          46                48
         Cash dividend payments                        (54)              (39)
         Repurchase of common stock                 (1,000)                -
         Net cash used in financing activities
          from continuing operations                (1,038)              (33)

    Net cash used in discontinued operations             -                (4)

    Net (decrease) increase in cash and cash
     equivalents                                      (606)              697
    Cash and cash equivalents, beginning of period   1,446               853
    Cash and cash equivalents, end of period          $840            $1,550
SOURCE  Lowe's Companies, Inc.
    -0-                             08/16/2004
    /CONTACT:  Shareholders, Paul Taaffe, +1-704-758-2033, or Media, Chris
Ahearn, +1-704-758-2304, both of Lowe's Companies, Inc./
    /Photo:  NewsCom:  http://www.newscom.com/cgi-bin/prnh/20031205/LOWLOGO
              AP Archive:  http://photoarchive.ap.org
              PRN Photo Desk, photodesk@prnewswire.com /
    /Web site:  http://www.lowes.com
                http://www.Lowes.com/investor /
    (LOW)

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

KM-JK 
-- CLM012 --
3445 08/16/2004 07:00 EDT http://www.prnewswire.com