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.

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