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News Release

Lowe's Reports Record Second Quarter Earnings
      -- Second Quarter Comparable Store Sales Increased 3.3 Percent --

MOORESVILLE, N.C., Aug. 21 /PRNewswire-FirstCall/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $935 million for the quarter ended August 4, 2006, an 11.4 percent increase over the same period a year ago. Diluted earnings per share increased 15.4 percent to $0.60 from $0.52 in the second quarter of 2005. For the six months ended August 4, 2006, net earnings grew 24.6 percent to $1.78 billion while diluted earnings per share increased 27.0 percent to $1.13.

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

Sales for the quarter increased 12.2 percent to $13.4 billion, up from $11.9 billion in the second quarter of 2005. For the six months ended August 4, 2006, sales increased 15.9 percent to $25.3 billion. Total sales results were impacted by the calendar shift described in the business outlook section of this release. Comparable store sales for the second quarter increased 3.3 percent and increased 4.4 percent in the first half of 2006.

"I am proud of the Lowe's team and the solid quarterly sales and earnings results delivered in a challenging economic environment," explained Robert A. Niblock, Lowe's chairman, president and CEO. "Despite a backdrop of higher energy costs and a tumultuous geo-political environment that has weighed on the consumer, the team remained focused on providing great customer service and compelling merchandise offerings. These efforts ensured Lowe's continued to capture market share with notable gains in Flooring, Appliances, Outdoor Power Equipment and Cabinets and Countertops in the quarter, according to third-party estimates.

"We remain focused on strategies to grow our business, however near-term pressures on the U.S. consumer have led to a more cautious outlook for the balance of the year," Niblock added. "As we enter the second half of 2006, we remain committed to providing the knowledgeable and attentive service customers have come to expect from Lowe's while prudently managing expenses in the current sales environment.

"Expectations for an orderly slowdown in the housing market, moderate income growth and a solid employment picture are stabilizing forces for the consumer," Niblock concluded. "I am confident the longer term drivers of our industry, including the required ongoing maintenance of the 124 million existing homes in the U.S., favorable demographics and solid household formation trends, combined with our customer focused culture, will ensure our continued success."

During the quarter, Lowe's opened 24 new stores including one relocation. As of August 4, 2006, Lowe's operated 1,281 stores in 49 states representing 145.4 million square feet of retail selling space, a 12.4 percent increase over last year.

A conference call to discuss second quarter 2006 operating results is scheduled for today (Monday, August 21) at 9:00 a.m. EDT. Please dial 888-817-4020 (international callers dial 706-679-3245) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe's website at www.Lowes.com/investor and clicking on Lowe's Second Quarter 2006 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until November 19, 2006.

Lowe's Business Outlook

Fiscal 2006 annual and fourth quarter comparisons will be negatively impacted by a 52 versus 53 week and 13 versus 14 week comparison, respectively. In addition, our 2006 quarterly comparisons will be impacted by a shift in comparable weeks to 2005. This week shift positively impacts the first quarter and is offset by negative impacts in the second and fourth quarters. The week shift does not impact comparable store sales results. Our 2006 guidance contemplates these factors.

    Third Quarter 2006 (comparisons to third quarter 2005)
    - The company expects to open 48 new stores reflecting square footage
      growth of approximately 13 percent
    - Total sales are expected to increase approximately 11 percent
    - The company expects to report a comparable store sales increase of 0 to
      2 percent
    - Operating margin (defined as gross margin less SG&A and depreciation) is
      expected to be essentially unchanged as a percent to sales
    - Store opening costs are expected to be approximately $39 million
    - Diluted earnings per share of $0.45 to $0.48 are expected
    - Lowe's third quarter ends on November 3, 2006 with operating results to
      be publicly released on Monday, November 20, 2006

Fiscal Year 2006 -- a 52-week Year (comparisons to fiscal year 2005 -- a 53-week year)

    - The company expects to open 155 stores in 2006 reflecting total square
      footage growth of approximately 12 percent
    - Total sales are expected to increase approximately 11 percent for the
      year (52 weeks versus 53 weeks in 2005)
    - The company expects to report a comparable store sales increase of 2 to
      3 percent
    - Operating margin (defined as gross margin less SG&A and depreciation) is
      expected to increase approximately 20 basis points
    - Store opening costs are expected to be approximately $140 million
    - Diluted earnings per share of $2.00 to $2.07 are expected for the fiscal
      year ending February 2, 2007

    Disclosure Regarding Forward-Looking Statements

This news release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the company's expectations for sales growth, comparable store sales, 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, changes in general economic conditions, such as interest rate and currency fluctuations, fuel and other energy costs, slower growth in personal income and other factors which can negatively affect our customers as well as our ability to: (i) respond to decreases in the number of new housing starts and the level of repairs, remodeling, and additions to existing homes, as well as general reduction in commercial building activity; (ii) secure, develop, and otherwise implement new technologies and processes designed to enhance our efficiency and competitiveness; (iii) attract, train, and retain highly-qualified associates; (iv) locate, secure, and develop new sites for store development; (v) respond to fluctuations in the prices and availability of services, supplies, and products; (vi) respond to the growth and impact of competition; (vii) address legal and regulatory matters; and (viii) respond to unanticipated weather conditions. For more information about these and other risks and uncertainties that we are exposed to, you should read the "Risk Factors" included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission and the descriptions of any material changes in those "Risk Factors" included in our subsequent Quarterly Reports on Form 10-Q.

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 2005 sales of $43.2 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 12 million customers a week at more than 1,275 home improvement stores in 49 states. Based in Mooresville, N.C., the 60-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
                                           August 4, 2006    July 29, 2005
    Current Earnings                       Amount  Percent  Amount  Percent

    Net sales                             $13,389  100.00  $11,929  100.00

    Cost of sales                           8,911   66.56    7,902   66.24

    Gross margin                            4,478   33.44    4,027   33.76

    Expenses:

    Selling, general and administrative     2,617   19.54    2,363   19.81

    Store opening costs                        28    0.21       25    0.21

    Depreciation                              283    2.11      236    1.97

    Interest                                   30    0.23       39    0.33

    Total expenses                          2,958   22.09    2,663   22.32

    Pre-tax earnings                        1,520   11.35    1,364   11.44

    Income tax provision                      585    4.37      525    4.41

    Net earnings                             $935    6.98     $839    7.03

    Weighted average shares outstanding -
     Basic                                  1,541            1,548

    Basic earnings per share                $0.61            $0.54

    Weighted average shares outstanding -
     Diluted                                1,571            1,605

    Diluted earnings per share              $0.60            $0.52

    Cash dividends per share                $0.05            $0.03

    Retained Earnings
    Balance at beginning of period        $12,985          $10,152
    Net earnings                              935              839
    Cash dividends                            (77)             (47)
    Balance at end of period              $13,843          $10,944



                                                  Six Months Ended
                                           August 4, 2006    July 29, 2005
    Current Earnings                       Amount  Percent  Amount  Percent

    Net sales                             $25,310  100.00  $21,842  100.00

    Cost of sales                          16,664   65.84   14,417   66.01

    Gross margin                            8,646   34.16    7,425   33.99

    Expenses:

    Selling, general and administrative     5,083   20.09    4,499   20.60

    Store opening costs                        53    0.20       50    0.23

    Depreciation                              557    2.20      473    2.16

    Interest                                   65    0.26       86    0.39

    Total expenses                          5,758   22.75    5,108   23.38

    Pre-tax earnings                        2,888   11.41    2,317   10.61

    Income tax provision                    1,112    4.39      892    4.08

    Net earnings                           $1,776    7.02   $1,425    6.53

    Weighted average shares outstanding -
     Basic                                  1,549            1,548

    Basic earnings per share                $1.15            $0.92

    Weighted average shares outstanding -
     Diluted                                1,580            1,608

    Diluted earnings per share              $1.13            $0.89

    Cash dividends per share                $0.08            $0.05

    Retained Earnings
    Balance at beginning of period        $12,191           $9,597
    Net earnings                            1,776            1,425
    Cash dividends                           (124)             (78)
    Balance at end of period              $13,843          $10,944



    Lowe's Companies, Inc.
    Consolidated Balance Sheets (Unaudited)
    In Millions, Except Par Value Data

                                                    Aug. 4,  July 29,  Feb. 3,
                                                      2006     2005     2006
    Assets

       Current assets:
         Cash and cash equivalents                     $316     $987     $423
         Short-term investments                         456      432      453
         Merchandise inventory - net                  7,176    6,165    6,635
         Deferred income taxes                          165      121      155
         Other assets                                   215      113      122

         Total current assets                         8,328    7,818    7,788

         Property, less accumulated depreciation     17,321   14,782   16,354
         Long-term investments                          200      190      294
         Other assets                                   188      198      203

         Total assets                               $26,037  $22,988  $24,639

    Liabilities and shareholders' equity

       Current liabilities:
         Current maturities of long-term debt           $32     $632      $32
         Accounts payable                             3,629    2,987    2,832
         Accrued salaries and wages                     316      329      424
         Self-insurance liabilities                     653      546      571
         Deferred revenue                               826      694      709
         Other current liabilities                    1,206    1,002    1,264

         Total current liabilities                    6,662    6,190    5,832

         Long-term debt, excluding
          current maturities                          3,410    2,810    3,499
         Deferred income taxes                          711      691      735
         Other long-term liabilities                    334      252      277

         Total liabilities                           11,117    9,943   10,343

       Shareholders' equity:
         Preferred stock - $5 par value,
          none issued                                     -        -        -
         Common stock - $.50 par value;
          Shares issued and outstanding
          August 4, 2006              1,538
          July 29, 2005               1,560
          February 3, 2006            1,568             769      780      784
         Capital in excess of par value                 307    1,320    1,320
         Retained earnings                           13,843   10,944   12,191
         Accumulated other comprehensive income           1        1        1

         Total shareholders' equity                  14,920   13,045   14,296

         Total liabilities and
          shareholders' equity                      $26,037  $22,988  $24,639



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

                                                        Six Months Ended

                                               August 4, 2006    July 29, 2005
    Cash flows from operating activities:
     Net earnings                                   $1,776            $1,425
      Adjustments to reconcile net earnings
       to net cash provided by
       operating activities:
       Depreciation and amortization                   591               508
       Deferred income taxes                           (34)              (46)
       Loss on disposition/writedown of
        fixed and other assets                           5                17
       Share-based payment expense                      35                38
       Changes in operating assets and liabilities:
        Merchandise inventory - net                   (541)             (316)
        Other operating assets                         (93)              (29)
        Accounts payable                               797               292
        Other operating liabilities                     68               340
     Net cash provided by operating activities       2,604             2,229

    Cash flows from investing activities:
     Purchases of short-term investments              (228)             (234)
     Proceeds from sale/maturity of
      short-term investments                           399               163
     Purchases of long-term investments               (225)             (132)
     Proceeds from sale/maturity of
      long-term investments                            141                 8
     Decrease (increase) in other long-
      term assets                                       13               (35)
     Fixed assets acquired                          (1,556)           (1,365)
     Proceeds from the sale of fixed and
      other long-term assets                            23                37
     Net cash used in investing activities          (1,433)           (1,558)

    Cash flows from financing activities:
     Repayment of long-term debt                       (16)              (16)
     Proceeds from employee stock purchase plan         36                32
     Proceeds from stock options exercised              48               147
     Cash dividend payments                           (124)              (78)
     Repurchase of common stock                     (1,226)             (299)
     Excess tax benefits of share-based payments         4                 -
     Net cash used in financing activities          (1,278)             (214)

    Net (decrease) increase in cash and
     cash equivalents                                 (107)              457
    Cash and cash equivalents, beginning
     of period                                         423               530
    Cash and cash equivalents, end of
     period                                           $316              $987
SOURCE  Lowe's Companies, Inc.
    -0-                             08/21/2006
    /CONTACT:  Shareholders'-Analysts' Inquiries, Robbin Moore,
+1-704-758-3579, or Media Inquiries, 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 CST
SU:  ERN ERP CCA

FB-JK
-- CLM009 --
3066 08/21/2006 07:00 EDT http://www.prnewswire.com