10-QPeriod: Q3 FY2024

LOWES COMPANIES INC Quarterly Report for Q3 Ended Aug 4, 2023

Filed August 30, 2023For Securities:LOW

Summary

Lowe's Companies, Inc. reported a decrease in net sales and net earnings for the second quarter and first six months of fiscal year 2023 compared to the prior year. Net sales for the second quarter declined 9.2% to $24.96 billion, and for the first six months, they decreased by 7.5% to $47.30 billion. This decline is largely attributed to the divestiture of the Canadian retail business in the prior year, as well as a 1.6% decrease in comparable sales for the second quarter, driven by lumber commodity deflation and consumer spending pressures. Despite the top-line pressure, the company saw positive comparable sales growth with its Pro customers, reflecting successful loyalty programs and enhanced online capabilities. Diluted earnings per common share also saw a decrease, with $4.56 reported for the second quarter of fiscal 2023, down from $4.67 in the prior year. The company continued its focus on capital allocation, repurchasing $2.2 billion of common stock and paying $624 million in dividends during the second quarter. Management highlights progress in its Total Home strategy and productivity initiatives as key drivers for future market share gains and long-term shareholder value, while acknowledging the ongoing market uncertainties.

Financial Highlights

49 data points
Beta

Revenue

$24.96B

33.7% Gross Margin

Net Income

$2.67B

10.7% Net Margin

EPS (Diluted)

$4.56

Total Assets

$44.52B

Cash & Equivalents

$3.49B

Free Cash Flow

$3.48B

Financial Statements
Beta
Revenue$24.96B
Cost of Revenue$16.56B
Gross Profit$8.40B
SG&A Expenses$4.09B
Operating Income$3.89B
Net Income$2.67B
EPS (Basic)$4.56
EPS (Diluted)$4.56
Shares Outstanding (Basic)584.00M
Shares Outstanding (Diluted)585.00M

Key Highlights

  • 1Net sales for the second quarter decreased by 9.2% to $24.96 billion, and for the first six months by 7.5% to $47.30 billion, primarily due to the sale of the Canadian retail business.
  • 2Comparable sales decreased by 1.6% in the second quarter, impacted by lumber deflation and macroeconomic pressures on DIY spending, although Pro customer sales showed positive growth.
  • 3Diluted earnings per share for the second quarter were $4.56, a decrease from $4.67 in the prior year.
  • 4Gross margin as a percentage of sales improved by 42 basis points in the second quarter, driven by lower transportation costs and favorable product mix.
  • 5The company repurchased $2.2 billion of common stock and paid $624 million in dividends in the second quarter, continuing its capital return strategy.
  • 6Cash flows from operating activities remained strong at $5.97 billion for the first six months, though slightly down from $6.01 billion in the prior year.
  • 7Lowe's is expanding its rural store framework and enhancing its omnichannel experience, including a new nationwide same-day delivery option.

Frequently Asked Questions

The primary reason for the decrease in net sales is the divestiture of Lowe's Canadian retail business in the prior fiscal year. This significantly reduced the reported top-line figures compared to the prior year's comparable periods.

Lowe's is focusing on initiatives to drive Pro customer sales, such as its MVP Pro Rewards and Partnership Program. They are also enhancing their omnichannel experience, including launching a nationwide same-day delivery option, to improve customer engagement and sales across channels.

Lowe's is leveraging its 'Perpetual Productivity Improvement' (PPI) initiatives to manage expenses and adapt to unpredictable demand. They also reported an improvement in gross margin due to lower transportation costs and a favorable product mix.

Lowe's continues to be committed to returning excess cash to shareholders. In the second quarter, they repurchased $2.2 billion of common stock and paid $624 million in dividends. As of August 4, 2023, they had $16.6 billion remaining under their share repurchase program.