MOORESVILLE, N.C.–(BUSINESS WIRE)– Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $540 million for the quarter ended May 3, 2013, a 2.5 percent increase over the same period a year ago. Diluted earnings per share increased 14.0 percent to $0.49 from $0.43 in the first quarter of 2012.

Sales for the quarter decreased 0.5 percent to $13.1 billion from $13.2 billion in the first quarter of 2012, while comparable sales for the quarter decreased 0.7 percent.

“Results for indoor categories were solid for the quarter, a testament to the team’s continued focus on improving our core business through cross-functional collaboration and consistent execution in stores and across other selling channels,” commented Robert A. Niblock, Lowe’s chairman, president and CEO.

“Cooler than normal temperatures and greater precipitation resulted in a delayed spring selling season which impacted our results in exterior categories,” Niblock added. “While overall performance in the month of March was particularly soft, April improved significantly and we have maintained that positive momentum through the first few weeks of May.”

Delivering on the commitment to return excess cash to shareholders, the company repurchased $1.0 billion of stock and paid $178 million in dividends in the first quarter of 2013.

As of May 3, 2013, Lowe’s operated 1,755 stores in the United States, Canada and Mexico, representing 197.5 million square feet of retail selling space.

A conference call to discuss first quarter 2013 operating results is scheduled for today (Wednesday, May 22) at 9:00 am ET. The conference call will be available through a webcast and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s First Quarter 2013 Earnings Conference Call Webcast. Supplemental slides will be available fifteen minutes prior to the start of the conference call. A replay of the call will be archived on Lowes.com/investor until August 20, 2013.

Lowe’s Business Outlook

Fiscal Year 2013 (comparisons to fiscal year 2012; based on U.S. GAAP unless otherwise noted)

  • Total sales are expected increase approximately 4 percent.
  • Comparable sales are expected to increase approximately 3.5 percent.
  • The company expects to open approximately 10 stores in fiscal year 2013.
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 60 basis points.
  • The effective income tax rate is expected to be approximately 38.1%.
  • Diluted earnings per share of approximately $2.05 are expected for the fiscal year ending January 31, 2014.

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, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, the Company’s strategic initiatives and any statement of an assumption underlying any of the foregoing, constitute “forward-looking statements” under the Act. Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we 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 either expressed or implied by our forward-looking statements including, but not limited to, changes in general economic conditions, such as continued high rates of unemployment, interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability and increasing regulation of consumer credit and of mortgage financing, inflation or deflation of commodity prices, and other factors which can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as the psychological effects of lower home prices, and in the level of repairs, remodeling, and additions to existing homes, as well as a 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) manage our business effectively as we adapt our traditional operating model to meet the changing expectations of our customers; (v) to maintain, improve, upgrade and protect our critical information systems; (vi) respond to fluctuations in the prices and availability of services, supplies, and products; (vii) respond to the growth and impact of competition; (viii) address changes in existing or new laws or regulations that affect consumer credit, employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax or environmental issues; and (ix) respond to unanticipated weather conditions that could adversely affect sales. In addition, we could experience additional impairment losses if the actual results of our operating stores are not consistent with the assumptions and judgments we have made in estimating future cash flows and determining asset fair values. For more information about these and other risks and uncertainties that we are exposed to, you should read the “Risk Factors” and “Critical Accounting Policies and Estimates” included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission (the “SEC”) and the description of material changes therein or updated version thereof, if any, included in our Quarterly Reports on Form 10-Q.

The forward-looking statements contained in this news release are based upon data available as of the date of this release or other specified date and speak only as of such date. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf about any of the matters covered in this release are qualified by these cautionary statements and the “Risk Factors” included in our Annual Report on Form 10-K to the SEC and the description of material changes, if any, therein included in our Quarterly Reports on Form 10-Q. We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, change in circumstances, future events, or otherwise.

With fiscal year 2012 sales of $50.5 billion, Lowe’s Companies, Inc. is a FORTUNE® 100 company that serves approximately 15 million customers a week at more than 1,750 home improvement stores in the United States, Canada and Mexico. Founded in 1946 and based in Mooresville, N.C., Lowe’s 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 and Percentage Data
                                 
            Three Months Ended
            May 3, 2013       May 4, 2012
Current Earnings           Amount     Percent       Amount     Percent
Net sales         $ 13,088     100.00     $ 13,153     100.00
                                 
Cost of sales           8,533     65.20       8,589     65.30
                                 
Gross margin           4,555     34.80       4,564     34.70
                                 
Expenses:                                
                                 
Selling, general and administrative           3,222     24.62       3,241     24.65
                                 
Depreciation           352     2.69       370     2.81
                                 
Interest – net           113     0.86       103     0.78
                                 
Total expenses           3,687     28.17       3,714     28.24
                                 
Pre-tax earnings           868     6.63       850     6.46
                                 
Income tax provision           328     2.50       323     2.45
                                 
Net earnings         $ 540     4.13     $ 527     4.01
                                 
                                 
Weighted average common shares outstanding – basic       1,088             1,206      
                                 
Basic earnings per common share (1)         $ 0.49           $ 0.43      
                                 
Weighted average common shares outstanding – diluted   1,090             1,208      
                                 
Diluted earnings per common share (1)         $ 0.49           $ 0.43      
                                 
Cash dividends per share         $ 0.16           $ 0.14      
                                 
                                 
Retained Earnings                                
Balance at beginning of period         $ 13,224           $ 15,852      
Net earnings           540             527      
Cash dividends           (174)             (165)      
Share repurchases           (972)             (1,657)      
Balance at end of period         $ 12,618           $ 14,557      
                                 

 

(1) Under the two-class method, earnings per share is calculated using net earnings allocable to commonshares, which is derived by reducing net earnings by the earnings allocable to participating securities. Net

earnings allocable to common shares used in the basic and diluted earnings per share calculation were $537

million for the three months ended May 3, 2013 and $524 million for the three months ended May 4, 2012.

 

                           
Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
                           
        Three Months Ended
        May 3,2013     May 4, 2012
        Amount     Percent     Amount     Percent
Net earnings     $ 540     4.13   $ 527     4.01
                           
Foreign currency translation adjustments – net of tax       -     -     6     0.05
                           
Net unrealized investment gains – net of tax       -     -     -     -
                           
Other comprehensive income       -     -     6     0.05
                           
Comprehensive income     $ 540     4.13   $ 533     4.06
                           

 

                           
Lowe’s Companies, Inc.  
Consolidated Balance Sheets  
In Millions, Except Par Value Data  
                           
              (Unaudited)     (Unaudited)      
              May 3, 2013     May 4, 2012     February 1, 2013
Assets                          
                           
Current assets:                          
Cash and cash equivalents           $ 1,081   $ 3,072   $ 541
Short-term investments             118     161     125
Merchandise inventory – net             10,274     9,786     8,600
Deferred income taxes – net             228     279     217
Other current assets             313     330     301
                           
Total current assets             12,014     13,628     9,784
                           
Property, less accumulated depreciation         21,257     21,821     21,477
Long-term investments             272     710     271
Other assets             1,188     1,049     1,134
                           
Total assets           $ 34,731   $ 37,208   $ 32,666
                           
Liabilities and shareholders’ equity                          
                           
Current liabilities:                          
Current maturities of long-term debt           $ 47   $ 593   $ 47
Accounts payable             7,041     6,977     4,657
Accrued compensation and employee benefits   467     492     670
Deferred revenue             1,008     881     824
Other current liabilities             1,876     2,053     1,510
                           
Total current liabilities             10,439     10,996     7,708
                           
Long-term debt, excluding current maturities         9,026     9,018     9,030
Deferred income taxes – net             440     412     455
Deferred revenue – extended protection plans         717     716     715
Other liabilities             857     863     901
                           
Total liabilities             21,479     22,005     18,809
                           
Shareholders’ equity:                          
Preferred stock – $5 par value, none issued         -     -     -
Common stock – $.50 par value;                          
Shares issued and outstanding                          
May 3, 2013     1,088                    
May 4, 2012     1,187                    
February 1, 2013     1,110       544     594     555
Capital in excess of par value             38     -     26
Retained earnings             12,618     14,557     13,224
Accumulated other comprehensive income         52     52     52
                           
Total shareholders’ equity             13,252     15,203     13,857
                           
Total liabilities and shareholders’ equity       $ 34,731   $ 37,208   $ 32,666
                       

 

                 
Consolidated Statements of Cash Flows (Unaudited)      
In Millions      
                 
        Three Months Ended
        May 3, 2013       May 4, 2012
Cash flows from operating activities:                
Net earnings       $ 540         $ 527  
Adjustments to reconcile net earnings to net cash provided by                
operating activities:                
Depreciation and amortization         376           396  
Deferred income taxes         (26 )         (230 )
Loss on property and other assets – net         5           19  
Loss on equity method investments         15           15  
Share-based payment expense         18           25  
Net changes in operating assets and liabilities:                
Merchandise inventory – net         (1,674 )         (1,432 )
Other operating assets         (5 )         (65 )
Accounts payable         2,381           2,625  
Other operating liabilities         362           587  
Net cash provided by operating activities         1,992           2,467  
                 
Cash flows from investing activities:                
Purchases of investments         (84 )         (708 )
Proceeds from sale/maturity of investments         89           627  
Capital expenditures         (196 )         (337 )
Contributions to equity method investments – net         (73 )         (70 )
Proceeds from sale of property and other long-term assets         6           29  
Other – net         (5 )         (11 )
Net cash used in investing activities         (263 )         (470 )
                 
Cash flows from financing activities:                
Net proceeds from issuance of long-term debt         -           1,984  
Repayment of long-term debt         (11 )         (10 )
Proceeds from issuance of common stock under    share-based payment plans         40           53  
Cash dividend payments         (178 )         (174 )
Repurchase of common stock         (1,046 )         (1,789 )
Other – net         5           (4 )
Net cash (used in) provided by financing activities         (1,190 )         60  
                 
Effect of exchange rate changes on cash         1           1  
                 
Net increase in cash and cash equivalents         540           2,058  
Cash and cash equivalents, beginning of period         541           1,014  
Cash and cash equivalents, end of period       $ 1,081         $ 3,072  
                         

 

Contacts

Shareholders’/Analysts’ Inquiries:
Tiffany Mason, 704-758-2033
tiffany.l.mason@lowes.com
or
Media Inquiries:
Chris Ahearn, 704-758-2304
chris.c.ahearn@lowes.com

 

Source: Lowe’s Companies, Inc.