Exhibit 99.1
May 18, 2009
For 7:00 am EDT Release
Contacts: | Shareholders’/Analysts’ Inquiries: | Media Inquiries: |
Paul Taaffe | Chris Ahearn | |
704-758-2033 | 704-758-2304 |
LOWE’S REPORTS FIRST QUARTER SALES AND EARNINGS RESULTS
MOORESVILLE, N.C. – Lowe’s Companies, Inc. (NYSE: LOW), the world’s second-largest home improvement retailer, today reported net earnings of $476 million for the quarter ended May 1, 2009, a 21.6 percent decline versus the same period a year ago. Diluted earnings per share declined 22.0 percent to $0.32 from $0.41 in the first quarter of 2008.
Sales for the quarter declined 1.5 percent to $11.8 billion, down from $12.0 billion in the first quarter of 2008. Comparable store sales for the first quarter declined 6.6 percent.
“Despite the difficult external environment, Lowe’s strong commitment to customer service and a compelling product offering led to continued market share gains in the first quarter and helped deliver sales within our guidance range,” commented Robert A. Niblock, Lowe’s chairman and CEO. “In addition, solid gross margin growth combined with appropriate expense management allowed us to deliver earnings per share above our guidance for the quarter.
“The economic pressures on consumers remain intense, and bigger ticket projects continue to be postponed as wary home improvement consumers watch the economic climate and housing market dynamics very closely,” Niblock added. “But, as spring arrived, we saw relative strength in smaller, outdoor projects.
“In recent weeks we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets, and home prices slow their decline,” Niblock continued. “These are all positive signs for the stabilization and ultimate recovery of home improvement industry sales, but since many of these variables remain at or near historic lows, we will continue to plan conservatively and manage expenses appropriately. Lowe’s remains focused on positioning the company for the future while maximizing opportunities presented today.”
During the quarter, Lowe’s opened 21 new stores. As of May 1, 2009, Lowe’s operated 1,670 stores in the United States and Canada representing 188.8 million square feet of retail selling space, a 7.0 percent increase over last year.
A conference call to discuss first quarter 2009 operating results is scheduled for today (Monday, May 18) at 9:00 am EDT. Please dial 888-817-4020 (international callers dial 706-679-8762) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s First Quarter 2009 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until August 16, 2009.
Lowe’s Business Outlook |
Second Quarter 2009 (comparisons to second quarter 2008)
· | The company expects to open approximately 18 new stores reflecting square footage growth of approximately 7 percent |
· | Total sales are expected to range from a decline of 2 percent to an increase of 1 percent |
· | The company expects comparable store sales to decline 4 to 8 percent |
· | Earnings before interest and taxes as a percentage of sales (operating margin) is expected to decline approximately 160 basis points driven by payroll, fixed cost and depreciation deleverage |
· | Store opening costs are expected to be approximately $13 million |
· | Diluted earnings per share of $0.51 to $0.55 are expected |
· | Lowe’s second quarter ends on July 31, 2009 with operating results to be publicly released on Monday, August 17, 2009 |
Fiscal Year 2009 (comparisons to fiscal year 2008)
· | The company expects to open 60 to 70 stores in 2009 reflecting total square footage growth of approximately 4 percent |
· | Total sales are expected to range from a decline of 2 percent to an increase of 1 percent |
· | The company expects comparable store sales to decline 4 to 8 percent |
· | Earnings before interest and taxes as a percentage of sales (operating margin) is expected to decline 130 to 140 basis points |
· | Store opening costs are expected to be approximately $50 million |
· | Diluted earnings per share of $1.13 to $1.25 are expected for the fiscal year ending January 29, 2010 |
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, capital expenditures, store openings, the housing market, the home improvement industry, demand for services, 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 rising unemployment, interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, changes in consumer spending, the availability and increasing regulation of consumer credit and mortgage financing, changes in the rate of housing turnover, 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 and the level of repairs, remodeling, and additions to existing homes, as well as 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) locate, secure, and successfully develop new sites for store development particularly in major metropolitan markets; (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 legal and regulatory developments; and (viii) respond to unanticipated weather conditions that could adversely affect sales. For more information about these and other risks and uncertainties that we are exposed to, you should read the “Risk Factors” included in our Annual Report on Form 10-K to the United States Securities and Exchange Commission and the description of material changes, if any, in those “Risk Factors” included in our Quarterly Reports on Form 10-Q.
The forward-looking statements contained in this news release speak only as of the date of this release and the company does not assume any obligation to update any such statements.
With fiscal year 2008 sales of $48.2 billion, Lowe’s Companies, Inc. is a FORTUNE® 50 company that serves approximately 14 million customers a week at more than 1,650 home improvement stores in the United States and Canada. 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.
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Lowe's Companies, Inc. | ||||||||||||||||
Consolidated Statements of Current and Retained Earnings (Unaudited) | ||||||||||||||||
In Millions, Except Per Share Data | ||||||||||||||||
Three Months Ended | ||||||||||||||||
May 1, 2009 | May 2, 2008 | |||||||||||||||
Current Earnings | Amount | Percent | Amount | Percent | ||||||||||||
Net sales | $ | 11,832 | 100.00 | $ | 12,009 | 100.00 | ||||||||||
Cost of sales | 7,636 | 64.54 | 7,843 | 65.31 | ||||||||||||
Gross margin | 4,196 | 35.46 | 4,166 | 34.69 | ||||||||||||
Expenses: | ||||||||||||||||
Selling, general and administrative | 2,944 | 24.88 | 2,725 | 22.69 | ||||||||||||
Store opening costs | 13 | 0.11 | 18 | 0.15 | ||||||||||||
Depreciation | 401 | 3.39 | 375 | 3.12 | ||||||||||||
Interest - net | 78 | 0.66 | 76 | 0.63 | ||||||||||||
Total expenses | 3,436 | 29.04 | 3,194 | 26.59 | ||||||||||||
Pre-tax earnings | 760 | 6.42 | 972 | 8.10 | ||||||||||||
Income tax provision | 284 | 2.40 | 365 | 3.04 | ||||||||||||
Net earnings | $ | 476 | 4.02 | $ | 607 | 5.06 | ||||||||||
Weighted average common shares outstanding - basic | 1,462 | 1,454 | ||||||||||||||
Basic earnings per common share | $ | 0.32 | $ | 0.42 | ||||||||||||
Weighted average common shares outstanding - diluted | 1,464 | 1,477 | ||||||||||||||
Diluted earnings per common share | $ | 0.32 | $ | 0.41 | ||||||||||||
Cash dividends per share | $ | 0.085 | $ | 0.080 | ||||||||||||
Retained Earnings | ||||||||||||||||
Balance at beginning of period | $ | 17,049 | $ | 15,345 | ||||||||||||
Net earnings | 476 | 607 | ||||||||||||||
Cash dividends | (126 | ) | (117 | ) | ||||||||||||
Balance at end of period | $ | 17,399 | $ | 15,835 | ||||||||||||
Lowe's Companies, Inc. | ||||||||||||||
Consolidated Balance Sheets | ||||||||||||||
In Millions, Except Par Value Data | ||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
May 1, 2009 | May 2, 2008 | January 30, 2009 | ||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 682 | $ | 913 | $ | 245 | ||||||||
Short-term investments | 460 | 295 | 416 | |||||||||||
Merchandise inventory - net | 9,013 | 8,438 | 8,209 | |||||||||||
Deferred income taxes - net | 183 | 259 | 166 | |||||||||||
Other current assets | 264 | 253 | 215 | |||||||||||
Total current assets | 10,602 | 10,158 | 9,251 | |||||||||||
Property, less accumulated depreciation | 22,715 | 21,641 | 22,722 | |||||||||||
Long-term investments | 448 | 537 | 253 | |||||||||||
Other assets | 444 | 318 | 460 | |||||||||||
Total assets | $ | 34,209 | $ | 32,654 | $ | 32,686 | ||||||||
Liabilities and shareholders' equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Short-term borrowings | $ | - | $ | 147 | $ | 987 | ||||||||
Current maturities of long-term debt | 52 | 34 | 34 | |||||||||||
Accounts payable | 5,843 | 5,345 | 4,109 | |||||||||||
Accrued compensation and employee benefits | 535 | 481 | 434 | |||||||||||
Self-insurance liabilities | 750 | 685 | 751 | |||||||||||
Deferred revenue | 741 | 893 | 674 | |||||||||||
Other current liabilities | 1,283 | 1,388 | 1,033 | |||||||||||
Total current liabilities | 9,204 | 8,973 | 8,022 | |||||||||||
Long-term debt, excluding current maturities | 5,023 | 5,576 | 5,039 | |||||||||||
Deferred income taxes - net | 594 | 699 | 660 | |||||||||||
Other liabilities | 951 | 787 | 910 | |||||||||||
Total liabilities | 15,772 | 16,035 | 14,631 | |||||||||||
Shareholders' equity: | ||||||||||||||
Preferred stock - $5 par value, none issued | - | - | - | |||||||||||
Common stock - $.50 par value; | ||||||||||||||
Shares issued and outstanding | ||||||||||||||
May 1, 2009 | 1,474 | |||||||||||||
May 2, 2008 | 1,462 | |||||||||||||
January 30, 2009 | 1,470 | 737 | 731 | 735 | ||||||||||
Capital in excess of par value | 296 | 48 | 277 | |||||||||||
Retained earnings | 17,399 | 15,835 | 17,049 | |||||||||||
Accumulated other comprehensive income (loss) | 5 | 5 | (6 | ) | ||||||||||
Total shareholders' equity | 18,437 | 16,619 | 18,055 | |||||||||||
Total liabilities and shareholders' equity | $ | 34,209 | $ | 32,654 | $ | 32,686 | ||||||||
Lowe's Companies, Inc. | ||||||||
Consolidated Statements of Cash Flows (Unaudited) | ||||||||
In Millions | ||||||||
Three Months Ended | ||||||||
May 1, 2009 | May 2, 2008 | |||||||
Cash flows from operating activities: | ||||||||
Net earnings | $ | 476 | $ | 607 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 434 | 404 | ||||||
Deferred income taxes | (83 | ) | 17 | |||||
Loss on property and other assets | 9 | 21 | ||||||
Transaction loss from exchange rate changes | 1 | - | ||||||
Share-based payment expense | 24 | 28 | ||||||
Changes in operating assets and liabilities: | ||||||||
Merchandise inventory - net | (801 | ) | (828 | ) | ||||
Other operating assets | (1 | ) | 42 | |||||
Accounts payable | 1,732 | 1,633 | ||||||
Other operating liabilities | 554 | 614 | ||||||
Net cash provided by operating activities | 2,345 | 2,538 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of short-term investments | (68 | ) | (64 | ) | ||||
Proceeds from sale/maturity of short-term investments | 122 | 86 | ||||||
Purchases of long-term investments | (302 | ) | (325 | ) | ||||
Proceeds from sale/maturity of long-term investments | 6 | 224 | ||||||
Decrease in other long-term assets | 15 | - | ||||||
Property acquired | (572 | ) | (805 | ) | ||||
Proceeds from sale of property and other long-term assets | 11 | 4 | ||||||
Net cash used in investing activities | (788 | ) | (880 | ) | ||||
Cash flows from financing activities: | ||||||||
Net decrease in short-term borrowings | (986 | ) | (915 | ) | ||||
Proceeds from issuance of long-term debt | - | 8 | ||||||
Repayment of long-term debt | (8 | ) | (13 | ) | ||||
Proceeds from issuance of common stock from stock options exercised | 1 | 10 | ||||||
Cash dividend payments | (126 | ) | (117 | ) | ||||
Excess tax benefits of share-based payments | - | 1 | ||||||
Net cash used in financing activities | (1,119 | ) | (1,026 | ) | ||||
Effect of exchange rate changes on cash | (1 | ) | - | |||||
Net increase in cash and cash equivalents | 437 | 632 | ||||||
Cash and cash equivalents, beginning of period | 245 | 281 | ||||||
Cash and cash equivalents, end of period | $ | 682 | $ | 913 | ||||