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 $50.2 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 15 million customers a week at more than 1,725 home improvement stores in the United States, Canada and Mexico. Founded in 1946 and based in Mooresville, N.C., Lowe's is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.
|Lowe's Companies, Inc.|
|Consolidated Statements of Current and Retained Earnings|
|In Millions, Except Per Share Data|
|Three Months Ended (1)||Year Ended (1)|
|February 3, 2012||January 28, 2011||February 3, 2012||January 28, 2011|
|Cost of sales||7,650||65.78||6,754||64.45||32,858||65.44||31,663||64.86|
|Selling, general and administrative||3,009||25.88||2,792||26.64||12,593||25.08||12,006||24.60|
|Interest - net||102||0.88||86||0.82||371||0.74||332||0.68|
|Income tax provision||163||1.40||171||1.63||1,067||2.13||1,218||2.49|
|Weighted average common shares outstanding - basic||1,239||1,358||1,271||1,401|
|Basic earnings per common share (2)||$||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||$||0.42|
|Balance at beginning of period||$||16,109||$||18,144||$||17,371||$||18,307|
|Balance at end of period||$||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 $1,993 million for the fiscal year ended January 28, 2011.
|Lowe's Companies, Inc.|
|Consolidated Balance Sheets|
|In Millions, Except Par Value Data|
|February 3, 2012||January 28, 2011|
|Cash and cash equivalents||$||1,014||$||652|
|Merchandise inventory - net||8,355||8,321|
|Deferred income taxes - net||183||193|
|Other current assets||234||330|
|Total current assets||10,072||9,967|
|Property, less accumulated depreciation||21,970||22,089|
|Liabilities and Shareholders' Equity|
|Current maturities of long-term debt||$||592||$||36|
|Accrued compensation and employee benefits||613||667|
|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|
|Preferred stock - $5 par value, none issued||-||-|
|Common stock - $.50 par value;|
|Shares issued and outstanding|
|February 3, 2012||1,241|
|January 28, 2011||1,354||621||677|
|Capital in excess of par value||14||11|
|Accumulated other comprehensive income||46||53|
|Total shareholders' equity||16,533||18,112|
|Total liabilities and shareholders' equity||$||33,559||$||33,699|
Lowe's Companies, Inc.
|Consolidated Statements of Cash Flows|
|February 3, 2012||January 28, 2011|
|Cash flows from operating activities:|
|Adjustments to reconcile net earnings to net cash provided by operating activities:|
|Depreciation and amortization||1,579||1,684|
|Deferred income taxes||54||(133||)|
|Loss on property and other assets - net||456||103|
|Share-based payment expense||107||115|
|Net changes in operating assets and liabilities:|
|Merchandise inventory - net||(33||)||(64||)|
|Other operating assets||137||(142||)|
|Other operating liabilities||215||219|
|Net cash provided by operating activities||4,349||3,852|
|Cash flows from investing activities:|
|Purchases of investments||(1,433||)||(2,605||)|
|Proceeds from sale/maturity of investments||2,120||1,822|
|Change in equity method investments - net||(232||)||(83||)|
|Proceeds from sale of property and other long-term assets||52||25|
|Other - net||(115||)||(14||)|
|Net cash used in investing activities||(1,437||)||(2,184||)|
|Cash flows from financing activities:|
|Net proceeds from issuance of long-term debt||993||1,985|
|Repayment of long-term debt||(37||)||(552||)|
Proceeds from issuance of common stock under share-based payment plans
|Cash dividend payments||(647||)||(571||)|
|Repurchase of common stock||(2,937||)||(2,618||)|
|Other - net||(21||)||1|
|Net cash used in financing activities||(2,549||)||(1,651||)|
|Effect of exchange rate changes on cash||(1||)||3|
|Net increase in cash and cash equivalents||362||20|
|Cash and cash equivalents, beginning of year||652||632|
|Cash and cash equivalents, end of year||$||1,014||$||652|
Source: Lowe's Companies, Inc.
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