10-QPeriod: Q1 FY2023

LOWES COMPANIES INC Quarterly Report for Q1 Ended Apr 29, 2022

Filed May 26, 2022For Securities:LOW

Summary

Lowe's Companies, Inc. reported net sales of $23.7 billion for the first quarter of 2022, a decrease of 3.1% compared to the prior year's $24.4 billion, largely attributed to a 4.0% decline in comparable sales. This decline was influenced by unseasonably cold and wet weather impacting spring-related outdoor categories, though Pro customer demand remained strong, particularly in Building Products. Despite the top-line softness, net earnings saw a slight increase of 0.5% to $2.3 billion, leading to a 9.4% rise in diluted earnings per common share to $3.51. The company also demonstrated operational efficiency through its Perpetual Productivity Improvement (PPI) initiatives, which helped improve operating margins. Lowe's is actively returning capital to shareholders, repurchasing $4.1 billion in common stock and paying $537 million in dividends during the quarter. The company also launched its new Pro Loyalty program, MVPs Pro Rewards, and is advancing its Total Home strategy.

Financial Highlights

49 data points
Beta

Revenue

$23.66B

34.0% Gross Margin

Net Income

$2.33B

9.9% Net Margin

EPS (Diluted)

$3.51

Total Assets

$49.73B

Cash & Equivalents

$3.41B

Free Cash Flow

$2.63B

Financial Statements
Beta
Revenue$23.66B
Cost of Revenue$15.61B
Gross Profit$8.05B
SG&A Expenses$4.30B
Operating Income$3.30B
Net Income$2.33B
EPS (Basic)$3.52
EPS (Diluted)$3.51
Shares Outstanding (Basic)660.00M
Shares Outstanding (Diluted)662.00M

Key Highlights

  • 1Net sales decreased 3.1% to $23.7 billion due to a 4.0% decline in comparable sales, primarily affected by delayed spring weather.
  • 2Net earnings increased 0.5% to $2.3 billion, with diluted EPS rising 9.4% to $3.51, indicating strong profitability despite lower sales.
  • 3Pro customer demand remained robust, especially in Building Products, supported by improved offerings and market demand.
  • 4The company actively returned capital to shareholders, repurchasing $4.1 billion of common stock and paying $537 million in dividends.
  • 5Lowe's launched its new Pro Loyalty program, MVPs Pro Rewards, to enhance partnerships with professional customers.
  • 6Operating margin improved due to efficiency gains from PPI initiatives, demonstrating effective cost management.
  • 7Inventory levels were elevated in seasonal categories due to the delayed spring selling season.

Frequently Asked Questions

Net sales decreased by 3.1% to $23.7 billion primarily due to a 4.0% decline in comparable sales. This was significantly impacted by unseasonably cold and wet weather across all regions, which delayed the spring selling season and affected outdoor and seasonal categories. However, strong demand from Pro customers in categories like Building Products helped to partially offset this decline.

Lowe's demonstrated operational efficiency through its Perpetual Productivity Improvement (PPI) initiatives, which improved operating margins. The company also benefited from disciplined pricing strategies and favorable product mix. These factors allowed for a slight increase in net earnings by 0.5% to $2.3 billion and a notable 9.4% rise in diluted EPS to $3.51, even with reduced sales.

Lowe's remains committed to returning excess cash to shareholders. In the first quarter, the company repurchased approximately $4.1 billion of its common stock and paid $537 million in cash dividends. The company has a substantial $15.7 billion remaining under its share repurchase program.

Lowe's is advancing its 'Total Home' strategy. Key initiatives include the recent launch of the 'MVPs Pro Rewards' loyalty program to strengthen relationships with professional customers, and improvements in omnichannel fulfillment capabilities, such as the market-based delivery model for big and bulky products. The company is also prepared to capitalize on the anticipated increase in demand as spring weather improves.