10-QPeriod: Q2 FY2024

LOWES COMPANIES INC Quarterly Report for Q2 Ended May 5, 2023

Filed June 1, 2023For Securities:LOW

Summary

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 billion 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 billion, 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 billion 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.

Financial Highlights

48 data points
Beta

Revenue

$22.35B

33.7% Gross Margin

Net Income

$2.26B

10.1% Net Margin

EPS (Diluted)

$3.77

Total Assets

$45.92B

Cash & Equivalents

$2.95B

Free Cash Flow

$1.73B

Financial Statements
Beta
Revenue$22.35B
Cost of Revenue$14.82B
Gross Profit$7.53B
SG&A Expenses$3.82B
Operating Income$3.29B
Net Income$2.26B
EPS (Basic)$3.78
EPS (Diluted)$3.77
Shares Outstanding (Basic)596.00M
Shares Outstanding (Diluted)597.00M

Key Highlights

  • 1Net sales decreased by 5.5% to $22.3 billion for the first quarter of fiscal 2023.
  • 2Comparable sales declined by 4.3%, with customer transactions down 4.0% and average ticket down 0.3%.
  • 3Net earnings decreased by 3.1% to $2.3 billion, with diluted EPS at $3.77.
  • 4The company returned $2.1 billion to shareholders through share repurchases and $633 million through dividends.
  • 5Merchandise inventory decreased by $717 million compared to the previous quarter, indicating effective inventory management.
  • 6Lowe's maintained a strong liquidity position with $3.0 billion in cash and cash equivalents and $3.9 billion in available credit facilities.
  • 7The sale of the Canadian retail business in the prior year impacted year-over-year sales comparisons.

Frequently Asked Questions

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%.

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.

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.

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.