01—Abstract
Summary
Summary of the 10-K filed April 2, 2019. Cited figures are marked; the original filing is the authoritative source.
Lowe's Companies, Inc. reported net sales of $71.3 billiona for the fiscal year ended February 1, 2019, marking a 3.9% increase compared to the prior year, primarily driven by a 2.4% rise in comparable sales and the adoption of new revenue recognition standards.
However, net earnings saw a significant decline of 32.9% to $2.3 billionb, largely due to substantial pre-tax charges totaling $1.1 billion related to strategic reassessments, including a $952 million goodwill impairment charge for its Canadian operations. The company also completed significant leadership transitions during the fiscal year, appointing a new CEO and Chairman.
Despite a challenging year marked by restructuring and impairments, Lowe's is focused on future growth through key initiatives such as merchandising excellence, supply chain transformation, operational efficiency, and intensified customer engagement, with a particular emphasis on winning the Pro customer segment. The company returned $4.5 billionc to shareholders through share repurchases and dividends, underscoring its commitment to capital allocation.
02—Key points
Key Highlights
- Net sales increased by 3.9% to $71.3 billion in fiscal 2018, driven by comparable sales growth of 2.4%.
- Net earnings decreased by 32.9% to $2.3 billion, impacted by significant charges, including a $952 million goodwill impairment for Canadian operations.
- The company is undergoing a strategic reassessment, leading to exits from Orchard Supply Hardware, certain underperforming stores in the U.S. and Canada, and plans to exit Mexico retail operations.
- Lowe's returned $4.5 billion to shareholders in fiscal 2018 through $3.0 billion in share repurchases and $1.5 billion in dividends.
- Significant leadership changes occurred, with Marvin R. Ellison appointed President and CEO, and Richard R. Dreiling appointed Chairman of the Board.
- The company plans to invest approximately $1.6 billion in capital expenditures for fiscal 2019, focusing on existing store improvements and strategic initiatives.
- Gross margin as a percentage of sales decreased by 57 basis points in fiscal 2018 compared to fiscal 2017, impacted by inventory rationalization and increased distribution costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Lowes Companies Inc kept $0.03.
- Revenue$71.31B100.0%
- Cost of revenue−$48.40B67.9%
- Gross profit$22.91B32.1%
- Operating costs−$18.89B26.5%
- Operating income$4.02B5.6%
- Interest, other & tax−$1.70B2.4%
- Net income$2.31B3.2%
Where FY2019 revenue went
$71.31B- Cost of revenue: $48.40B, 68% of revenue
- SG&A: $17.41B, 24% of revenue
- Net income: $2.31B, 3.2% of revenue
- Other operating costs: $1.48B, 2.1% of revenue
- Interest, other & tax: $1.70B, 2.4% of revenue
Kept 3.2% as net incomeNet income $2.31B · 3.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed April 2, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $71.31B$68.62B | +3.9% |
| Cost of Revenue | $48.40B$46.19B | +4.8% |
| Gross Profit | $22.91B$22.43B | +2.1% |
| SG&A Expenses | $17.41B$14.44B | +20.6% |
| Operating Income | $4.02B$6.59B | −39.0% |
| Net Income | $2.31B$3.45B | −32.9% |
| EPS (Basic) | $2.84$4.09 | −30.6% |
| EPS (Diluted) | $2.84$4.09 | −30.6% |
| Shares Outstanding (Basic) | 811.00M839.00M | −3.3% |
| Shares Outstanding (Diluted) | 812.00M840.00M | −3.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of Lowe's sales growth in fiscal 2018?
Lowe's sales growth in fiscal 2018 was primarily driven by a 2.4% increase in comparable sales, the adoption of the new revenue recognition accounting standard (ASU 2014-09) which reclassified profit sharing income, and the opening of new stores.
What caused the significant decrease in net earnings for fiscal 2018?
The substantial decrease in net earnings was primarily due to approximately $1.1 billion in pre-tax charges related to strategic reassessments. This included a $952 million goodwill impairment charge for its Canadian operations, costs associated with closing Orchard Supply Hardware, underperforming stores in the U.S. and Canada, and plans to exit Mexico retail operations.
How is Lowe's addressing its strategic challenges and planning for future growth?
Lowe's is implementing a strategy focused on four key areas: driving merchandising excellence, transforming its supply chain, delivering operational efficiency, and intensifying customer engagement, with a specific focus on growing its Pro customer segment. They are also rationalizing inventory and investing in top-selling items.
What is Lowe's approach to returning capital to shareholders?
Lowe's has an ongoing share repurchase program, with $13.9 billion remaining as of February 1, 2019. The company also increased its quarterly dividend payment by 17% in 2018, demonstrating a commitment to returning capital to shareholders through both dividends and share buybacks.
06—Continue