– Comparable Sales Increased 9.6 Percent –

– Diluted Earnings Per Share Increased 37.5 Percent –

MOORESVILLE, N.C.–()–Lowe’s Companies, Inc. (NYSE: LOW), the world’s second largest home improvement retailer, today reported net earnings of $941 million for the quarter ended August 2, 2013, a 26.0 percent increase over the same period a year ago. Diluted earnings per share increased 37.5 percent to $0.88 from $0.64 in the second quarter of 2012. For the six months ended August 2, 2013, net earnings increased 16.2 percent from the same period a year ago to $1.48 billion, and diluted earnings per share increased 27.1 percent to $1.36.

Sales for the quarter increased 10.3 percent to $15.7 billion from $14.2 billion in the second quarter of 2012, and comparable sales for the quarter increased 9.6 percent. For the six month period, sales were $28.8 billion, a 5.1 percent increase over the same period a year ago, and comparable sales increased 4.6 percent.

“Home improvement demand was strong during the quarter, and we capitalized on it with improving execution. I’d like to thank our employees for their hard work and continued dedication to serving customers,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “We drove a healthy balance of ticket and transaction growth, and delivered solid performance across all product categories.”

Delivering on the commitment to return excess cash to shareholders, the company repurchased $1.0 billion of stock and paid $174 million in dividends in the quarter. For the six month period, the company repurchased $2.0 billion and paid $352 million in dividends.

As of August 2, 2013, Lowe’s operated 1,758 stores in the United States, Canada and Mexico, representing 197.7 million square feet of retail selling space.

A conference call to discuss second quarter 2013 operating results is scheduled for today (Wednesday, August 21) 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 Second 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 November 19, 2013.

Lowe’s Business Outlook

The company has combined its year-to-date performance with its previous assumptions for the second half of 2013 when providing the updated outlook below.

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

  • Total sales are expected to increase approximately 5 percent.
  • Comparable sales are expected to increase approximately 4.5 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 65 basis points.
  • The effective income tax rate is expected to be approximately 37.9%.
  • Diluted earnings per share of approximately $2.10 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 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       Six Months Ended
                  August 2, 2013       August 3, 2012       August 2, 2013       August 3, 2012
Current Earnings                 Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent
Net sales               $ 15,711     100.00     $ 14,249     100.00     $ 28,800     100.00     $ 27,402     100.00
                                                                   
Cost of sales                 10,314     65.65       9,415     66.07       18,848     65.44       18,003     65.70
                                                                   
Gross margin                 5,397     34.35       4,834     33.93       9,952     34.56       9,399     34.30
                                                                   
Expenses:                                                                  
                                                                   
Selling, general and administrative                 3,414     21.73       3,172     22.26       6,635     23.04       6,414     23.40
                                                                   
Depreciation                 367     2.33       369     2.59       719     2.50       739     2.70
                                                                   
Interest – net                 110     0.70       96     0.68       223     0.77       199     0.73
                                                                   
Total expenses                 3,891     24.76       3,637     25.53       7,577     26.31       7,352     26.83
                                                                   
Pre-tax earnings                 1,506     9.59       1,197     8.40       2,375     8.25       2,047     7.47
                                                                   
Income tax provision                 565     3.60       450     3.15       893     3.11       772     2.82
                                                                   
Net earnings               $ 941     5.99     $ 747     5.25     $ 1,482     5.14     $ 1,275     4.65
                                                                   
                                                                   
Weighted average common shares outstanding – basic         1,067             1,157             1,077             1,182      
                                                                   
Basic earnings per common share (1)               $ 0.88           $ 0.64           $ 1.37           $ 1.07      
                                                                   
Weighted average common shares outstanding – diluted         1,068             1,159             1,079             1,183      
                                                                   
Diluted earnings per common share (1)               $ 0.88           $ 0.64           $ 1.36           $ 1.07      
                                                                   
Cash dividends per share               $ 0.18           $ 0.16           $ 0.34           $ 0.30      
                                                                   
                                                                   
Retained Earnings                                                                  
Balance at beginning of period               $ 12,618           $ 14,557           $ 13,224           $ 15,852      
Net earnings                 941             747             1,482             1,275      
Cash dividends                 (192)             (184)             (366)             (350)      
Share repurchases                 (863)             (921)             (1,836)             (2,578)      
Balance at end of period               $ 12,504           $ 14,199           $ 12,504           $ 14,199      
(1) Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, which is derived by reducing net earnings bythe earnings allocable to participating securities. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were$935 million for the three months ended August 2, 2013 and $742 million for the three months ended August 3, 2012. Net earnings allocable to common sharesused in the basic and diluted earnings per share calculation were $1,472 million for the six months ended August 2, 2013 and $1,266 million for the six monthsended August 3, 2012.

 

Lowe’s Companies, Inc.      
Consolidated Statements of Comprehensive Income (Unaudited)      
In Millions, Except Percentage Data      
                                                             
            Three Months Ended       Six Months Ended
            August 2, 2013       August 3, 2012       August 2, 2013       August 3, 2012
            Amount     Percent       Amount     Percent   Amount     Percent       Amount     Percent
Net earnings         $ 941     5.99     $ 747     5.25     $ 1,482     5.14     $ 1,275     4.65
                                                             
Foreign currency translation adjustments – net of tax   (26)     (0.17)       (8)     (0.05)       (26)     (0.09)       (1)     -
                                                             
Net unrealized investment gains – net of tax           -     -       3     0.01       -     -       2     0.01
                                                             
Other comprehensive (loss)/income           (26)     (0.17)       (5)     (0.04)       (26)     (0.09)       1     0.01
                                                             
Comprehensive income         $ 915     5.82     $ 742     5.21     $ 1,456     5.05     $ 1,276     4.66
 
Lowe’s Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data
                           
              (Unaudited)     (Unaudited)      
              August 2, 2013     August 3, 2012     February 1, 2013
Assets                          
                           
Current assets:                          
Cash and cash equivalents           $ 1,085   $ 1,710   $ 541
Short-term investments             189     586     125
Merchandise inventory – net             9,106     8,699     8,600
Deferred income taxes – net             224     279     217
Other current assets             309     325     301
Total current assets             10,913     11,599     9,784
                           
Property, less accumulated depreciation           20,969     21,734     21,477
Long-term investments             306     485     271
Other assets             1,220     1,214     1,134
Total assets           $ 33,408   $ 35,032   $ 32,666
                           
Liabilities and shareholders’ equity                          
                           
Current liabilities:                          
Current maturities of long-term debt           $ 47   $ 594   $ 47
Accounts payable             5,664     5,084     4,657
Accrued compensation and employee benefits           651     561     670
Deferred revenue             985     847     824
Other current liabilities             1,993     1,936     1,510
Total current liabilities             9,340     9,022     7,708
                           
Long-term debt, excluding current maturities           9,015     9,008     9,030
Deferred income taxes – net             390     580     455
Deferred revenue – extended protection plans           733     726     715
Other liabilities             868     872     901
Total liabilities             20,346     20,208     18,809
                           
Shareholders’ equity:                          
Preferred stock – $5 par value, none issued           -     -     -
Common stock – $.50 par value;                          
Shares issued and outstanding                          
August 2, 2013 1,063                        
August 3, 2012 1,152                        
February 1, 2013 1,110           532     576     555
Capital in excess of par value             -     2     26
Retained earnings             12,504     14,199     13,224
Accumulated other comprehensive income           26     47     52
Total shareholders’ equity             13,062     14,824     13,857
Total liabilities and shareholders’ equity         $ 33,408   $ 35,032   $ 32,666
 
Lowe’s Companies, Inc.                    
Consolidated Statements of Cash Flows (Unaudited)                    
In Millions                    
                     
          Six Months Ended
          August 2, 2013         August 3, 2012
Cash flows from operating activities:                    
Net earnings         $ 1,482           $ 1,275  
Adjustments to reconcile net earnings to net cash provided by                    
operating activities:                    
Depreciation and amortization           767             789  
Deferred income taxes           (56 )           (59 )
Loss on property and other assets – net           12             36  
Loss on equity method investments           27             29  
Share-based payment expense           44             54  
Changes in operating assets and liabilities:                    
Merchandise inventory – net           (517 )           (345 )
Other operating assets           4             (159 )
Accounts payable           1,009             731  
Other operating liabilities           584             445  
Net cash provided by operating activities           3,356             2,796  
                     
Cash flows from investing activities:                    
Purchases of investments           (303 )           (1,176 )
Proceeds from sale/maturity of investments           224             897  
Capital expenditures           (376 )           (622 )
Contributions to equity method investments – net           (113 )           (159 )
Proceeds from sale of property and other long-term assets           47             49  
Other – net           3             (21 )
Net cash used in investing activities           (518 )           (1,032 )
                     
Cash flows from financing activities:                    
Net proceeds from issuance of long-term debt           -             1,984  
Repayment of long-term debt           (22 )           (20 )
Proceeds from issuance of common stock under  share-based payment plans         100             90  
Cash dividend payments           (352 )           (340 )
Repurchase of common stock           (2,027 )           (2,793 )
Other – net           8             13  
Net cash used in financing activities           (2,293 )           (1,066 )
                     
Effect of exchange rate changes on cash           (1 )           (2 )
                     
Net increase in cash and cash equivalents           544             696  
Cash and cash equivalents, beginning of period           541             1,014  
Cash and cash equivalents, end of period         $ 1,085           $ 1,710  
 

 

Contacts

Lowe’s Companies, Inc.
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