MOORESVILLE, N.C., May 18, 2016 /PRNewswire/ -- Lowe's
Companies, Inc. (NYSE: LOW) today reported net earnings of
$884 million for the quarter ended
April 29, 2016, a 31.4 percent
increase over the same period a year ago. Diluted earnings per
share increased 40.0 percent to $0.98
from $0.70 in the first quarter of
2015.
The first quarter results include an unrealized gain on a
foreign currency hedge entered into in advance of the Company's
pending RONA acquisition, which increased pre-tax earnings for the
first quarter by $160 million and
diluted earnings per share by $0.11.
Sales for the first quarter increased 7.8 percent to
$15.2 billion from $14.1 billion in the first quarter of 2015, and
comparable sales for the quarter increased 7.3 percent.
Comparable sales for the U.S. home improvement business increased
7.5 percent.
"We executed well in the quarter, growing both transaction and
average ticket to achieve comparable sales growth that exceeded our
expectations," commented Robert A.
Niblock, Lowe's chairman, president and CEO. "We continued
to focus on providing better omni-channel customer experiences, and
saw strength in indoor as well as outdoor categories.
"Our team's project expertise and commitment to customer service
allowed us to capitalize on strong home improvement demand during
the quarter, and I would like to thank them for their efforts,"
Niblock added.
Delivering on its commitment to return excess cash to
shareholders, the Company repurchased $1.2
billion of stock under its share repurchase program and paid
$255 million in dividends in the
first quarter.
As of April 29, 2016, Lowe's
operated 1,860 home improvement and hardware stores in the United States, Canada and Mexico representing 202.3 million square feet
of retail selling space.
A conference call to discuss first quarter 2016 operating
results is scheduled for today (Wednesday,
May 18) at 9:00 am ET.
The conference call will be available by webcast and can be
accessed by visiting Lowe's website at www.Lowes.com/investor and
clicking on Lowe's First Quarter 2016 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 16, 2016.
Lowe's Business Outlook1
Fiscal Year 2016 -- a 53-week Year (comparisons to fiscal
year 2015 -- a 52-week year; based on U.S. GAAP unless otherwise
noted)
- Total sales are expected to increase approximately 6 percent,
including the 53rd week
- The 53rd week is expected to increase total sales by
approximately 1.5 percent
- Comparable sales are expected to increase approximately 4
percent
- The company expects to add approximately 45 home improvement
and hardware stores.
- Earnings before interest and taxes as a percentage of sales
(operating margin) are expected to increase 80 to 90 basis
points.2
- The effective income tax rate is expected to be approximately
38.1%.
- Diluted earnings per share of approximately $4.11 are expected for the fiscal year ending
February 3, 2017.
1 Lowe's Business Outlook excludes the impact of the
pending RONA acquisition.
2 Operating margin growth excludes the unrealized
gain on the foreign currency hedge entered into in advance of the
Company's pending RONA acquisition as well as the impact of the
non-cash impairment charge the Company recognized in the fourth
quarter of 2015 in connection with its decision to exit its joint
venture with Woolworths Limited in Australia.
Disclosure Regarding Forward-Looking Statements
This news release includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
including those regarding the proposed acquisition by Lowe's
Companies, Inc. of RONA, inc. and the expected impact of the
transaction on Lowe's strategic and operational plans and financial
results. Statements including words such as "may", "will",
"could", "should", "would", "plan", "potential", "intend",
"anticipate", "believe", "estimate" or "expect" and other words,
terms and phrases of similar meaning are forward-looking
statements. Forward-looking statements involve estimates,
expectations, projections, goals, forecasts, assumptions, risks and
uncertainties. Such forward-looking statements include, but
are not limited to, statements or implications about the benefits
of the transaction, including future financial and operating
results, Lowe's plans, objectives, expectations and intentions,
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, Lowe's strategic initiatives, any
statement of an assumption underlying any of the foregoing and
other statements that are not historical facts. 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 these forward-looking
statements including, but not limited to, changes in general
economic conditions, such as the rate of unemployment, interest
rate and currency fluctuations, fuel and other energy costs, slower
growth in personal income, changes in consumer spending, changes in
the rate of housing turnover, the availability 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 a demographic shift from single
family to multi-family housing, a reduced rate of growth in
household formation, and slower rates of growth in housing
renovation and repair activity, as well as uneven recovery in
commercial building activity; (ii) secure, develop, and otherwise
implement new technologies and processes necessary to realize the
benefits of our strategic initiatives and enhance our efficiency;
(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) maintain, improve, upgrade and protect our critical information
systems from data security breaches and other cyber threats; (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 appropriately
to unanticipated failures to maintain a high level of product and
service quality that could result in a negative impact on customer
confidence and adversely affect sales. In addition, we could
experience additional impairment losses if either 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, or we are required to
reduce the carrying amount of our investment in certain
unconsolidated entities that are accounted for under the equity
method. With respect to the transaction discussed herein
specifically, potential risks include the possibility that the
transaction will not close or that the closing may be delayed; the
effect of the announcement of the transaction on Lowe's and RONA's
strategic relationships, operating results and businesses
generally; significant transaction costs or unknown liabilities;
failure to realize the expected benefits of the transaction; and
general economic conditions. For more information about these and
other risks and uncertainties that we are exposed to, you should
read the "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Critical
Accounting Policies and Estimates" included in our most recent
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 or subsequent filings with the
SEC.
The forward-looking statements contained in this news release
are expressly qualified in their entirety by the foregoing
cautionary statements. All such forward-looking statements 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 in
the "Risk Factors" included in our most recent 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 or
subsequent filings with the SEC. 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.
Lowe's Companies, Inc.
Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home
improvement company serving over 16 million customers a week in
the United States, Canada and Mexico. With fiscal year 2015 sales of
$59.1 billion, Lowe's has 1,860 home
improvement and hardware stores and more than 270,000 employees.
Founded in 1946 and based in Mooresville,
N.C., Lowe's supports the communities it serves through
programs that focus on K-12 public education and community
improvement projects. 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
|
|
|
|
|
April 29,
2016
|
|
|
May 1,
2015
|
Current
Earnings
|
|
|
|
Amount
|
%
Sales
|
|
|
Amount
|
%
Sales
|
Net
sales
|
|
|
$
|
15,234
|
100.00
|
|
$
|
14,129
|
100.00
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
|
9,897
|
64.96
|
|
|
9,117
|
64.53
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
|
|
5,337
|
35.04
|
|
|
5,012
|
35.47
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
|
3,394
|
22.28
|
|
|
3,415
|
24.16
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
357
|
2.34
|
|
|
365
|
2.59
|
|
|
|
|
|
|
|
|
|
|
Interest -
net
|
|
|
|
156
|
1.03
|
|
|
134
|
0.95
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
|
|
3,907
|
25.65
|
|
|
3,914
|
27.70
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
earnings
|
|
|
|
1,430
|
9.39
|
|
|
1,098
|
7.77
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
|
546
|
3.59
|
|
|
425
|
3.01
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
|
$
|
884
|
5.80
|
|
$
|
673
|
4.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
- basic
|
|
|
|
897
|
|
|
|
950
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share (1)
|
|
|
$
|
0.98
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
- diluted
|
|
|
|
899
|
|
|
|
952
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per common share (1)
|
|
|
$
|
0.98
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
|
|
$
|
0.28
|
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
Earnings
|
|
|
|
|
|
|
|
|
|
Balance at beginning
of period
|
|
|
$
|
7,593
|
|
|
$
|
9,591
|
|
Net
earnings
|
|
|
|
884
|
|
|
|
673
|
|
Cash
dividends
|
|
|
|
(251)
|
|
|
|
(218)
|
|
Share
repurchases
|
|
|
|
(1,152)
|
|
|
|
(961)
|
|
Balance at end of
period
|
|
|
$
|
7,074
|
|
|
$
|
9,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 by the earnings allocable to participating
securities. Net earnings allocable to common shares used in
the basic and diluted earnings per share calculation were $880
million for the three months ended April 29, 2016 and $670 million
for the three months ended May 1, 2015.
|
Lowe's Companies,
Inc.
|
|
|
|
|
|
|
|
Consolidated
Statements of Comprehensive Income (Unaudited)
|
|
|
|
|
|
In Millions, Except
Percentage Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
April 29,
2016
|
|
|
May 1,
2015
|
|
|
|
|
Amount
|
%
Sales
|
|
|
Amount
|
%
Sales
|
Net
earnings
|
|
|
$
|
884
|
5.80
|
|
$
|
673
|
4.76
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments - net of tax
|
|
|
|
83
|
0.55
|
|
|
22
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
|
83
|
0.55
|
|
|
22
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
$
|
967
|
6.35
|
|
$
|
695
|
4.92
|
|
|
|
|
|
|
|
|
|
|
Lowe's Companies,
Inc.
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
In Millions, Except
Par Value Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
April 29,
2016
|
|
|
May 1,
2015
|
|
|
January 29,
2016
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,561
|
|
$
|
1,434
|
|
$
|
405
|
Short-term
investments
|
|
|
174
|
|
|
95
|
|
|
307
|
Merchandise inventory
- net
|
|
|
11,055
|
|
|
10,614
|
|
|
9,458
|
Other current
assets
|
|
|
683
|
|
|
393
|
|
|
391
|
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
16,473
|
|
|
12,536
|
|
|
10,561
|
|
|
|
|
|
|
|
|
|
|
Property, less
accumulated depreciation
|
|
|
19,463
|
|
|
19,892
|
|
|
19,577
|
Long-term
investments
|
|
|
400
|
|
|
384
|
|
|
222
|
Deferred income taxes
- net
|
|
|
154
|
|
|
160
|
|
|
241
|
Other
assets
|
|
|
687
|
|
|
1,343
|
|
|
665
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
37,177
|
|
$
|
34,315
|
|
$
|
31,266
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
-
|
|
$
|
-
|
|
$
|
43
|
Current maturities of
long-term debt
|
|
|
1,083
|
|
|
1,026
|
|
|
1,061
|
Accounts
payable
|
|
|
8,821
|
|
|
8,023
|
|
|
5,633
|
Accrued compensation
and employee benefits
|
|
615
|
|
|
555
|
|
|
820
|
Deferred
revenue
|
|
|
1,233
|
|
|
1,153
|
|
|
1,078
|
Other current
liabilities
|
|
|
2,369
|
|
|
2,213
|
|
|
1,857
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
14,121
|
|
|
12,970
|
|
|
10,492
|
|
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding current maturities
|
|
|
14,322
|
|
|
10,324
|
|
|
11,545
|
Deferred revenue -
extended protection plans
|
|
726
|
|
|
727
|
|
|
729
|
Other
liabilities
|
|
|
796
|
|
|
817
|
|
|
846
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
29,965
|
|
|
24,838
|
|
|
23,612
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock - $5
par value, none issued
|
|
|
-
|
|
|
-
|
|
|
-
|
Common stock - $.50
par value;
|
|
|
|
|
|
|
|
|
|
Shares issued and
outstanding
|
|
|
|
|
|
|
|
|
|
April 29,
2016
|
894
|
|
|
|
|
|
|
|
|
May 1,
2015
|
947
|
|
|
|
|
|
|
|
|
January 29,
2016
|
910
|
|
447
|
|
|
473
|
|
|
455
|
Capital in excess of
par value
|
|
|
-
|
|
|
-
|
|
|
-
|
Retained
earnings
|
|
|
7,074
|
|
|
9,085
|
|
|
7,593
|
Accumulated other
comprehensive loss
|
|
|
(309)
|
|
|
(81)
|
|
|
(394)
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity
|
|
|
7,212
|
|
|
9,477
|
|
|
7,654
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
$
|
37,177
|
|
$
|
34,315
|
|
$
|
31,266
|
|
|
|
|
|
|
|
|
|
|
Lowe's Companies,
Inc.
|
|
|
|
|
Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
|
|
In
Millions
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
April 29,
2016
|
|
May 1,
2015
|
Cash flows from
operating activities:
|
|
|
|
|
Net
earnings
|
|
$
884
|
|
$
673
|
Adjustments to
reconcile net earnings to net cash provided by
|
|
|
|
|
operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
383
|
|
391
|
Deferred income
taxes
|
|
52
|
|
(38)
|
Loss on property and
other assets - net
|
|
11
|
|
7
|
Loss on equity method
investments
|
|
3
|
|
17
|
Share-based payment
expense
|
|
25
|
|
29
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Merchandise inventory
- net
|
|
(1,556)
|
|
(1,687)
|
Other operating
assets
|
|
(186)
|
|
(48)
|
Accounts
payable
|
|
3,169
|
|
2,893
|
Other operating
liabilities
|
|
435
|
|
241
|
Net cash provided
by operating activities
|
|
3,220
|
|
2,478
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchases of
investments
|
|
(310)
|
|
(65)
|
Proceeds from
sale/maturity of investments
|
|
264
|
|
64
|
Capital
expenditures
|
|
(208)
|
|
(232)
|
Contributions to
equity method investments - net
|
|
-
|
|
(11)
|
Proceeds from sale of
property and other long-term assets
|
|
11
|
|
3
|
Purchases of
derivative instruments
|
|
(103)
|
|
-
|
Other -
net
|
|
(3)
|
|
-
|
Net cash used in
investing activities
|
|
(349)
|
|
(241)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Net decrease in
short-term borrowings
|
|
(44)
|
|
-
|
Net proceeds from
issuance of long-term debt
|
|
3,267
|
|
-
|
Repayment of
long-term debt
|
|
(484)
|
|
(10)
|
Proceeds from
issuance of common stock under
share-based payment plans
|
|
20
|
|
21
|
Cash dividend
payments
|
|
(255)
|
|
(222)
|
Repurchase of common
stock
|
|
(1,253)
|
|
(1,109)
|
Other -
net
|
|
33
|
|
50
|
Net cash provided
by (used in) financing activities
|
|
1,284
|
|
(1,270)
|
|
|
|
|
|
Effect of exchange
rate changes on cash
|
|
1
|
|
1
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
4,156
|
|
968
|
Cash and cash
equivalents, beginning of period
|
|
405
|
|
466
|
Cash and cash
equivalents, end of period
|
|
$
4,561
|
|
$
1,434
|
|
|
|
|
|
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SOURCE Lowe's Companies, Inc.