Lowe's Fourth Quarter Comparable Store Sales Increased 3.4%

MOORESVILLE, N.C. - Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $322 million for the quarter ended February 3, 2012, a 13.0 percent increase over the same period a year ago. Diluted earnings per share increased 23.8 percent to $0.26 from $0.21 in the fourth quarter of 2010. For the fiscal year ended February 3, 2012, net earnings decreased 8.5 percent to $1.8 billion from the prior fiscal year, while diluted earnings per share increased 0.7 percent to $1.43 from $1.42.

Sales for the quarter ended February 3, 2012, increased 11.0 percent to $11.6 billion, up from $10.5 billion in the same period a year ago. For the fiscal year ended February 3, 2012, sales were $50.2 billion, a 2.9 percent increase over the prior fiscal year.

Lowe's fiscal year ends on the Friday nearest the end of January; therefore, fiscal year 2011 included 53 weeks. The 53rd week contributed $766 million to sales and approximately $0.05 to diluted earnings per share in the fourth quarter and fiscal year ended February 3, 2012.

Comparable store sales for the fourth quarter increased 3.4 percent versus a comparable 14-week period, while comparable store sales for the U.S. business increased 3.5 percent. Comparable store sales for the fiscal year were essentially flat.

Included in the above reported results are charges related to previously announced store closings, discontinued projects and long-lived asset impairments which, in the aggregate, reduced pre-tax earnings for the fourth quarter by $53 million and diluted earnings per share by $0.03. For the fiscal year, the charges reduced pre-tax earnings by $523 million and diluted earnings per share by $0.26.

"We delivered solid results for the quarter, including earnings per share that exceeded our guidance," commented Robert A. Niblock, Lowe's chairman, president and CEO. "I am encouraged by the progress we made in 2011 toward delivering better customer experiences and transforming our business to drive long-term sales growth, increased profitability and shareholder value. I would like to thank our hard working employees for their ongoing dedication and customer focus.

"In 2012, we will capitalize on refinements we have made to our operating strategies as well as our efforts to improve the customer experience," Niblock added. "The team is well positioned to drive stronger comparable store sales growth and expanded operating margins."

As of February 3, 2012, Lowe's operated 1,745 stores in the United States, Canada and Mexico representing 196.5 million square feet of retail selling space.

A conference call to discuss fourth quarter 2011 operating results is scheduled for today (Monday, February 27) 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 Fourth Quarter 2011 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until May 20, 2012.

Lowe's Business Outlook

Fiscal Year 2012 - a 52-week Year (comparisons to fiscal year 2011 - a 53-week year)

  • Total sales are expected to increase 1 to 2 percent. On a 52 versus 52 week basis, total sales are expected to increase approximately 3 percent.
  • The company expects comparable store sales to increase 1 to 3 percent (52 versus 52 week basis).
  • The company expects to open approximately 10 stores in fiscal year 2012.
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 100 basis points.
  • Depreciation expense is expected to be approximately $1.5 billion.
  • The effective income tax rate is expected to be approximately 38.1%.
  • Diluted earnings per share of $1.75 to $1.85 are expected for the fiscal year ending February 1, 2013.

 

With fiscal year 2011 sales of $50.2 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 15 million customers a week at more than 1,725 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











In Millions, Except Per Share Data






































Three Months Ended (1)

Year Ended (1)




(Unaudited)

(Unaudited)

(Unaudited)







February 3, 2012
January 28, 2011
February 3, 2012
January 28, 2011
Current Earnings


Amount Percent Amount Percent Amount Percent Amount Percent
Net sales

$ 11,629
100.00
$ 10,480
100.00
$ 50,208
100.00
$ 48,815
100.00


















Cost of sales


7,650
65.78

6,754
64.45

32,858
65.44

31,663
64.86


















Gross margin


3,979
34.22

3,726
35.55

17,350
34.56

17,152
35.14


















Expenses:


































Selling, general and administrative


3,009
25.88

2,792
26.64

12,593
25.08

12,006
24.60


















Depreciation


383
3.29

392
3.74

1,480
2.95

1,586
3.25


















Interest - net


102
0.88

86
0.82

371
0.74

332
0.68


















Total expenses


3,494
30.05

3,270
31.20

14,444
28.77

13,924
28.53


















Pre-tax earnings


485
4.17

456
4.35

2,906
5.79

3,228
6.61


















Income tax provision


163
1.40

171
1.63

1,067
2.13

1,218
2.49


















Net earnings

$ 322
2.77
$ 285
2.72
$ 1,839
3.66
$ 2,010
4.12




































Weighted average common shares outstanding - basic 1,239



1,358



1,271



1,401



















Basic earnings per common share (2)

$ 0.26


$ 0.21


$ 1.43


$ 1.42



















Weighted average common shares outstanding - diluted 1,241



1,361



1,273



1,403



















Diluted earnings per common share (2)

$ 0.26


$ 0.21


$ 1.43


$ 1.42



















Cash dividends per share

$ 0.14


$ 0.11


$ 0.53


$ 0.42





































Retained Earnings
















Balance at beginning of period

$ 16,109


$ 18,144


$ 17,371


$ 18,307

Net earnings


322



285



1,839



2,010

Cash dividends


(174 )


(148 )


(672 )


(588 )
Share repurchases


(405 )


(910 )


(2,686 )


(2,358 )
Balance at end of period

$ 15,852


$ 17,371


$ 15,852


$ 17,371













































(1) The fiscal year and three months ended February 3, 2012, had 53 weeks and 14 weeks, respectively. The fiscal year and three months ended January 28, 2011, had 52 weeks and 13 weeks, respectively.


(2) Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, 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 $320 million for the three months ended February 3, 2012 and $283 million for the three months ended January 28, 2011. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $1,824 million for the fiscal year ended February 3, 2012 and $1,993 million for the fiscal year ended January 28, 2011.








Lowe's Companies, Inc.





Consolidated Balance Sheets





In Millions, Except Par Value Data















(Unaudited)





February 3, 2012

January 28, 2011
Assets












Current assets:





Cash and cash equivalents
$ 1,014
$ 652
Short-term investments

286

471
Merchandise inventory - net

8,355

8,321
Deferred income taxes - net

183

193
Other current assets

234

330







Total current assets

10,072

9,967







Property, less accumulated depreciation

21,970

22,089
Long-term investments

504

1,008
Other assets

1,013

635







Total assets
$ 33,559
$ 33,699







Liabilities and Shareholders' Equity












Current liabilities:





Current maturities of long-term debt
$ 592
$ 36
Accounts payable

4,352

4,351
Accrued compensation and employee benefits
613

667
Deferred revenue

801

707
Other current liabilities

1,533

1,358







Total current liabilities

7,891

7,119







Long-term debt, excluding current maturities
7,035

6,537
Deferred income taxes - net

531

467
Deferred revenue - extended protection plans
704

631
Other liabilities

865

833







Total liabilities

17,026

15,587







Shareholders' equity:





Preferred stock - $5 par value, none issued

-

-
Common stock - $.50 par value;





Shares issued and outstanding





February 3, 2012 1,241




January 28, 2011 1,354
621

677
Capital in excess of par value

14

11
Retained earnings

15,852

17,371
Accumulated other comprehensive income

46

53







Total shareholders' equity

16,533

18,112







Total liabilities and shareholders' equity $ 33,559
$ 33,699











Lowe's Companies, Inc.





Consolidated Statements of Cash Flows



In Millions










Year Ended


(Unaudited)



February 3, 2012
January 28, 2011
Cash flows from operating activities:



Net earnings
$ 1,839

$ 2,010
Adjustments to reconcile net earnings to net cash provided by operating activities:







Depreciation and amortization

1,579


1,684
Deferred income taxes

54


(133 )
Loss on property and other assets - net

456


103
Share-based payment expense

107


115
Net changes in operating assets and liabilities:



Merchandise inventory - net

(33 )

(64 )
Other operating assets

137


(142 )
Accounts payable

(5 )

60
Other operating liabilities

215


219
Net cash provided by operating activities

4,349


3,852





Cash flows from investing activities:



Purchases of investments

(1,433 )

(2,605 )
Proceeds from sale/maturity of investments

2,120


1,822
Property acquired

(1,829 )

(1,329 )
Change in equity method investments - net

(232 )

(83 )
Proceeds from sale of property and other long-term assets

52


25
Other - net

(115 )

(14 )
Net cash used in investing activities

(1,437 )

(2,184 )





Cash flows from financing activities:



Net proceeds from issuance of long-term debt

993


1,985
Repayment of long-term debt

(37 )

(552 )

Proceeds from issuance of common stock under share-based payment plans


100


104
Cash dividend payments

(647 )

(571 )
Repurchase of common stock

(2,937 )

(2,618 )
Other - net

(21 )

1
Net cash used in financing activities

(2,549 )

(1,651 )





Effect of exchange rate changes on cash

(1 )

3





Net increase in cash and cash equivalents

362


20
Cash and cash equivalents, beginning of year

652


632
Cash and cash equivalents, end of year
$ 1,014

$ 652








 

Source: Lowe's Companies, Inc.

Have something to say? Share your thoughts with us in the comments below.