01—Abstract
Summary
Summary of the 10-K filed March 29, 2016. Cited figures are marked; the original filing is the authoritative source.
Lowe's Companies, Inc.'s 2016 10-K report highlights a year of solid sales growth, with net sales increasing by 5.1% to $59.1 billiona.
This growth was driven by a 4.8% increase in comparable sales, attributed to both a higher average ticket price and more transactions. Despite this top-line strength, net earnings saw a slight decline of 5.6% to $2.5 billionb. This decrease was primarily due to a significant $530 million non-cash impairment charge related to the company's decision to exit the Australian home improvement market.
Excluding the Australian venture's impact, adjusted net income rose by 14.0%, demonstrating the underlying health of the business. The company continued its commitment to returning capital to shareholders, repurchasing $3.8 billionc in stock and paying $957 million in dividends.
Lowe's is actively pursuing strategic growth initiatives, including a pending acquisition of Canadian retailer RONA Inc., signaling a focus on expanding its international presence and strengthening its position in key markets. The company remains optimistic about the home improvement industry's outlook for 2016, expecting continued growth supported by a strengthening economy and housing market.
02—Key points
Key Highlights
- Net sales increased by 5.1% to $59.1 billion in fiscal year 2015, with comparable sales up 4.8%.
- Net earnings decreased by 5.6% to $2.5 billion, impacted by a $530 million non-cash impairment charge related to exiting the Australian market.
- Excluding the impairment charge, adjusted net income increased by 14.0% and adjusted diluted EPS rose by 21.4%.
- The company repurchased $3.8 billion of its stock and paid $957 million in dividends, demonstrating a strong commitment to returning capital to shareholders.
- Lowe's announced a definitive agreement to acquire RONA Inc. for approximately C$3.2 billion, aiming to expand its presence in Canada.
- The company is focusing on enhancing its omni-channel capabilities and improving its product and service offerings for professional (Pro) customers.
- The outlook for the home improvement industry in fiscal year 2016 remains positive, supported by economic growth and favorable housing market trends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Lowes Companies Inc kept $0.04.
- Revenue$59.07B100.0%
- Cost of revenue−$38.50B65.2%
- Gross profit$20.57B34.8%
- Operating costs−$15.60B26.4%
- Operating income$4.97B8.4%
- Interest, other & tax−$2.42B4.1%
- Net income$2.55B4.3%
Where FY2016 revenue went
$59.07B- Cost of revenue: $38.50B, 65% of revenue
- SG&A: $14.11B, 24% of revenue
- Net income: $2.55B, 4.3% of revenue
- Other operating costs: $1.49B, 2.5% of revenue
- Interest, other & tax: $2.42B, 4.1% of revenue
Kept 4.3% as net incomeNet income $2.55B · 4.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 29, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $59.07B$56.22B | +5.1% |
| Cost of Revenue | $38.50B$36.66B | +5.0% |
| Gross Profit | $20.57B$19.56B | +5.2% |
| SG&A Expenses | $14.11B$13.27B | +6.3% |
| Operating Expenses | $16.15B$15.28B | +5.7% |
| Operating Income | $4.97B$4.79B | +3.7% |
| Net Income | $2.55B$2.70B | −5.6% |
| EPS (Basic) | $2.73$2.71 | +0.7% |
| EPS (Diluted) | $2.73$2.71 | +0.7% |
| Shares Outstanding (Basic) | 927.00M988.00M | −6.2% |
| Shares Outstanding (Diluted) | 929.00M990.00M | −6.2% |
05—Questions
Frequently Asked Questions
What was the primary reason for the decline in net earnings despite sales growth?
The primary reason for the decline in net earnings was a $530 million non-cash impairment charge recognized in the fourth quarter of fiscal year 2015. This charge was related to Lowe's decision to exit its joint venture in the Australian home improvement market.
What is the significance of the announced acquisition of RONA Inc.?
The acquisition of RONA Inc. is a key strategic initiative to significantly expand Lowe's presence in the Canadian market. RONA is a major Canadian retailer and distributor of hardware, building materials, and home renovation products, and its acquisition is expected to accelerate Lowe's international growth strategy.
How is Lowe's returning capital to shareholders?
Lowe's is actively returning capital to shareholders through its share repurchase program and by paying dividends. In fiscal year 2015, the company repurchased $3.8 billion of its stock and paid $957 million in dividends.
What is Lowe's outlook for the home improvement industry in the upcoming year?
Lowe's anticipates a positive outlook for the home improvement industry in fiscal year 2016. This optimism is based on forecasts indicating continued economic growth, steady job creation, improved household incomes, and favorable trends in the housing market.
06—Continue