10-QPeriod: Q2 FY2022

LOWES COMPANIES INC Quarterly Report for Q2 Ended Jul 30, 2021

Filed August 26, 2021For Securities:LOW

Summary

Lowe's Companies Inc. reported solid financial results for the second quarter and first six months of fiscal year 2021, demonstrating resilience and strategic execution. For the second quarter, net sales saw a modest increase of 1.0% to $27.6 billion, driven by a significant 13.8% rise in average ticket, though partially offset by a 12.8% decrease in customer transactions. Net earnings grew by 6.7% to $3.0 billion, resulting in a 13.8% increase in diluted earnings per share to $4.25. The company's "Total Home" strategy continued to gain traction, particularly with the Pro customer segment, which experienced 21% growth in sales during the quarter. Despite a decline in Do-It-Yourself (DIY) demand as customers returned to pre-pandemic routines, Lowe's focused on enhancing its omnichannel experience with new digital tools and improved in-store fulfillment. Significant capital was returned to shareholders through $3.1 billion in share repurchases and $0.43 billion in dividends during the quarter. The company maintained a strong liquidity position with $4.8 billion in cash and cash equivalents and $3.0 billion in undrawn credit facilities.

Financial Highlights

50 data points
Beta

Revenue

$27.57B

33.8% Gross Margin

Net Income

$3.02B

10.9% Net Margin

EPS (Diluted)

$4.25

Total Assets

$49.40B

Cash & Equivalents

$4.83B

Free Cash Flow

$2.04B

Financial Statements
Beta
Revenue$27.57B
Cost of Revenue$18.26B
Gross Profit$9.31B
SG&A Expenses$4.69B
Operating Income$4.21B
Net Income$3.02B
EPS (Basic)$4.27
EPS (Diluted)$4.25
Shares Outstanding (Basic)705.00M
Shares Outstanding (Diluted)707.00M

Key Highlights

  • 1Net sales increased by 1.0% to $27.6 billion for Q2 2021, and by 10.7% to $52.0 billion for the first six months of 2021.
  • 2Diluted earnings per share (EPS) rose by 13.8% to $4.25 in Q2 2021 compared to $3.74 in Q2 2020.
  • 3The "Total Home" strategy drove significant growth in Pro customer sales, up 21% in Q2 2021.
  • 4Average ticket increased by 13.8% in Q2 2021, indicating higher spending per transaction.
  • 5The company returned substantial capital to shareholders, with $3.1 billion in share repurchases and $430 million in dividends during Q2 2021.
  • 6Operating cash flow for the first six months was $6.9 billion, demonstrating strong cash generation.
  • 7Lowe's maintained robust liquidity with $4.8 billion in cash and cash equivalents and $3.0 billion in available credit facilities as of July 30, 2021.

Frequently Asked Questions

In the second quarter of fiscal year 2021, Lowe's reported a 1.0% increase in net sales to $27.6 billion, primarily driven by a 13.8% increase in average ticket, which offset a 12.8% decrease in customer transactions. Net earnings grew 6.7% to $3.0 billion, and diluted EPS increased 13.8% to $4.25. For the first six months, net sales increased by 10.7% and diluted EPS increased significantly, reflecting strong operational performance and strategic initiatives.

Lowe's "Total Home" strategy, which focuses on Pro customers, online expansion, and enhanced customer experience, continues to perform well. Pro customer sales saw a substantial 21% increase in the second quarter, indicating the strategy's effectiveness in capturing this important market segment. The company is also enhancing its omnichannel capabilities, including new digital tools and in-store fulfillment options.

Lowe's demonstrated a strong commitment to returning capital to shareholders. In the second quarter of 2021, the company repurchased $3.1 billion of its common stock and paid $430 million in dividends. For the first six months, share repurchases totaled $6.2 billion. The company has a substantial remaining authorization for share repurchases, totaling $13.6 billion as of July 30, 2021, and maintained a robust liquidity position.

Despite an uncertain business environment, Lowe's management expressed confidence in its ability to continue driving market share gains and operating efficiency through the agility of its "Total Home" strategy. Key focuses include modernizing the supply chain, enhancing the Pro customer experience, and expanding e-commerce capabilities.