LOWES COMPANIES INC Quarterly Report for Q3 Ended Aug 1, 2014

Summary

Lowe's Companies, Inc. (LOW) reported strong second-quarter results for fiscal year 2014, with net sales increasing by 5.7% to $16.6 billion and comparable sales up by 4.4%. This growth was driven by broad-based strength across product categories and regions, recovering from weather-related impacts in the first quarter. The company also saw a significant increase in net earnings, up 10.4% to $1.0 billion, leading to diluted earnings per share of $1.04, an 18.2% rise year-over-year. Financially, Lowe's demonstrated solid operational execution, improving gross margin by 20 basis points and leveraging selling, general, and administrative (SG&A) expenses. The company actively returned capital to shareholders through $183 million in dividends and $1.1 billion in share repurchases during the quarter. Management expressed confidence in the business outlook for the remainder of 2014, citing positive macroeconomic indicators and strategic initiatives, including investments in customer experience and the Pro Services business, which continues to outperform.

Key Highlights

• 1Net sales increased 5.7% to $16.6 billion for the second quarter of fiscal 2014.
• 2Comparable sales increased 4.4% for the quarter, driven by both increased transactions and average ticket.
• 3Net earnings rose 10.4% to $1.0 billion, with diluted EPS growing 18.2% to $1.04.
• 4Gross margin improved by 20 basis points to 34.55% of sales due to the Value Improvement program.
• 5SG&A expenses leveraged 40 basis points as a percentage of sales, benefiting from lower incentive compensation and operating expense management.
• 6The company returned significant capital to shareholders, repurchasing $1.1 billion in common stock and paying $183 million in dividends during Q2.
• 7The Pro Services business continued its strong performance, outperforming company comparable sales for the 12th consecutive quarter.

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