EX-99.1 2 exhibit991.htm LOWE'S Q4 2011 EARNINGS RELEASE exhibit991.htm
 
Exhibit 99.1
LOWE'S LOGO

February 27, 2012
For 6:00 am ET Release

                                                                                              
 
 Contacts:   Shareholders’/Analysts’ Inquiries:     Media Inquiries:
   Tiffany Mason    Chris Ahearn
   704-758-2033    704-758-2304
 
LOWE’S REPORTS FOURTH QUARTER SALES AND EARNINGS RESULTS
-- Fourth Quarter Comparable Store Sales Increased 3.4 Percent --

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.
 
 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 store sales, earnings and performance, shareholder value, capital expenditures, store openings, the housing market, the home improvement industry, demand for services, share repurchases and any statement of an assumption underlying any of the foregoing, constitute "forward-looking statements" under the Act.   Although the company believes that the expectations, opinions, projections, and comments reflected in its forward-looking statements are reasonable, it 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 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 falling 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 and develop and implement new business concepts to meet the changing expectations of our customers; (v) respond to fluctuations in the prices and availability of services, supplies, and products; (vi) respond to the growth and impact of competition; (vii) 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 (viii) 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 in 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 2011 sales of $50.2 billion, Lowe's Companies, Inc. is a FORTUNE® 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