01—Abstract
Summary
Summary of the 10-Q filed June 1, 2023. Cited figures are marked; the original filing is the authoritative source.
Lowe's Companies, Inc. reported a 5.5% decrease in net sales for the first quarter of fiscal 2023, totaling $22.3 billion, compared to $23.7 billiona in the prior year's quarter.
This decline was impacted by the sale of the Canadian retail business and a 4.3% decrease in comparable sales, attributed to lumber commodity deflation, adverse weather, and macroeconomic uncertainty affecting DIY spending. Despite these headwinds, the company saw positive comparable sales growth with Pro customers, driven by loyalty programs, and experienced growth in online sales. Net earnings for the quarter were $2.3 billionb, a slight decrease of 3.1% year-over-year, with diluted earnings per share at $3.77.
The company highlighted efforts to gain efficiencies through its Perpetual Productivity Improvement (PPI) initiatives and continued investment in technology and supply chain modernization. Lowe's demonstrated a strong commitment to returning capital to shareholders, repurchasing $2.1 billionc in common stock and paying $633 million in dividends during the quarter, while maintaining a robust liquidity position with $3.0 billion in cash and cash equivalents and $3.9 billion in undrawn credit facilities.
02—Key points
Key Highlights
- Net sales decreased by 5.5% to $22.3 billion for the first quarter of fiscal 2023.
- Comparable sales declined by 4.3%, with customer transactions down 4.0% and average ticket down 0.3%.
- Net earnings decreased by 3.1% to $2.3 billion, with diluted EPS at $3.77.
- The company returned $2.1 billion to shareholders through share repurchases and $633 million through dividends.
- Merchandise inventory decreased by $717 million compared to the previous quarter, indicating effective inventory management.
- Lowe's maintained a strong liquidity position with $3.0 billion in cash and cash equivalents and $3.9 billion in available credit facilities.
- The sale of the Canadian retail business in the prior year impacted year-over-year sales comparisons.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Lowes Companies Inc kept $0.10.
- Revenue$22.35B100.0%
- Cost of revenue−$14.82B66.3%
- Gross profit$7.53B33.7%
- Operating costs−$4.24B19.0%
- Operating income$3.29B14.7%
- Interest, other & tax−$1.03B4.6%
- Net income$2.26B10.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed June 1, 2023Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $22.35B$27.48B | −18.7% |
| Cost of Revenue | $14.82B$18.34B | −19.2% |
| Gross Profit | $7.53B$9.13B | −17.6% |
| SG&A Expenses | $3.82B$4.46B | −14.2% |
| Operating Income | $3.29B$4.23B | −22.3% |
| Net Income | $2.26B$2.99B | −24.5% |
| EPS (Basic) | $3.78$4.68 | −19.2% |
| EPS (Diluted) | $3.77$4.67 | −19.3% |
| Shares Outstanding (Basic) | 596.00M638.00M | −6.6% |
| Shares Outstanding (Diluted) | 597.00M639.00M | −6.6% |
05—Questions
Frequently Asked Questions
What were the main drivers of the sales decline in the first quarter of fiscal 2023?
The primary drivers for the sales decline were the sale of the Canadian retail business in the prior year, lumber commodity deflation, unfavorable weather conditions, and macroeconomic uncertainty that impacted do-it-yourself (DIY) consumer discretionary spending. Comparable sales decreased by 4.3%.
How did Lowe's manage its expenses despite the sales decrease?
Lowe's focused on gaining efficiencies through its Perpetual Productivity Improvement (PPI) initiatives. Additionally, the company benefited from a one-time legal settlement and the gain on contingent consideration related to the Canadian retail business sale, which helped to offset pressures from lower sales and wage investments. Selling, General, and Administrative (SG&A) expenses leveraged by 107 basis points as a percentage of sales.
What is Lowe's strategy for returning capital to shareholders?
Lowe's demonstrated a strong commitment to shareholder returns by repurchasing approximately $2.1 billion of common stock and paying $633 million in dividends during the quarter. The company has a substantial remaining authorization of $18.7 billion for future share repurchases.
How is Lowe's investing in its future growth?
The company is investing in its strategic initiatives, including enhancing customer experience and driving performance. This includes modernizing technology, rolling out a market-based delivery model for big and bulky products, and strengthening its Pro customer offerings through loyalty programs. Capital expenditures for the quarter were $380 million, with guidance for the full fiscal year up to $2.0 billion.
06—Continue