10-QPeriod: Q2 FY2015

LOWES COMPANIES INC Quarterly Report for Q2 Ended May 2, 2014

Filed June 3, 2014For Securities:LOW

Summary

Lowe's Companies, Inc. reported its first-quarter results for fiscal year 2014, demonstrating a modest increase in net sales and a significant jump in net earnings and diluted earnings per share compared to the prior year. The company navigated challenging weather conditions in the first quarter, particularly in the Northeast, which impacted comparable sales, especially in outdoor product categories. Despite these headwinds, Lowe's saw positive comparable sales growth driven by an increase in average ticket size and strength in its Pro Services business. Financially, Lowe's maintained strong operating cash flows, which continue to be its primary source of liquidity. The company actively managed its capital resources, returning value to shareholders through substantial share repurchases and a declared increase in quarterly dividends. The company reaffirmed its full-year 2014 outlook, expressing confidence in its strategic priorities and expected moderate improvement in the home improvement industry.

Financial Highlights

47 data points
Beta

Revenue

$13.40B

35.5% Gross Margin

Net Income

$624.00M

4.7% Net Margin

EPS (Diluted)

$0.61

Total Assets

$34.23B

Cash & Equivalents

$658.00M

Free Cash Flow

$1.80B

Financial Statements
Beta
Revenue$13.40B
Cost of Revenue$8.64B
Gross Profit$4.76B
SG&A Expenses$3.32B
Operating Expenses$3.82B
Net Income$624.00M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)1.01B
Shares Outstanding (Diluted)1.02B

Key Highlights

  • 1Net sales increased by 2.4% to $13.4 billion for the first quarter of 2014.
  • 2Net earnings rose by 15.6% to $624 million, with diluted earnings per share increasing by 24.5% to $0.61.
  • 3Comparable sales increased by 0.9%, driven by a 0.8% increase in average ticket, though impacted by unfavorable weather in certain regions.
  • 4The Pro Services business outperformed the company average for comparable sales.
  • 5Lowe's repurchased $850 million of common stock in the first quarter and declared a quarterly dividend of $0.23 per share, a 27.8% increase.
  • 6The company maintained a strong liquidity position with $1.99 billion in net cash provided by operating activities.
  • 7Long-lived asset impairments resulted in $23 million of losses during the quarter.

Frequently Asked Questions

Unfavorable weather conditions, particularly in the Northeast, negatively impacted comparable sales, especially in outdoor product categories. However, regions with more favorable weather, like the South and West, saw mid-single digit comparable sales increases, and the company's ability to position weather-relevant products helped mitigate some impacts.

Lowe's is focusing on three key priorities: enhancing its Sales & Operations Planning process for improved seasonal planning and inventory management, strengthening product and service offerings for the Pro customer, and developing customer experience design capabilities to better understand and meet customer needs throughout their home improvement projects.

Lowe's is actively returning capital through its share repurchase program, having repurchased $850 million in the first quarter with a total of $3.4 billion planned for the fiscal year. Additionally, the company declared a quarterly cash dividend of $0.23 per share, a significant increase from the previous quarter.

Lowe's anticipates a moderate improvement in home improvement industry growth, supported by positive economic indicators like employment and income growth. The company reaffirmed its fiscal year 2014 guidance, expecting total sales to increase approximately 4% and diluted earnings per share of approximately $2.63, reflecting confidence in its strategic execution and the favorable macroeconomic environment.