10-QPeriod: Q3 FY2024

LOWES COMPANIES INC Quarterly Report for Q3 Ended Nov 3, 2023

Filed November 29, 2023For Securities:LOW

Summary

Lowe's Companies, Inc. reported its third quarter and year-to-date results for fiscal year 2023, reflecting a challenging retail environment. For the third quarter, net sales decreased by 12.8% to $20.5 billion, and comparable sales fell by 7.4%. This decline was attributed to reduced DIY discretionary spending, though the company noted positive comparable sales growth with its Pro customers, indicating progress in its Pro strategy. Net earnings for the quarter significantly improved year-over-year to $1.8 billion ($3.06 per diluted share) from $154 million ($0.25 per diluted share) in the prior year. This substantial increase is largely due to a $2.1 billion pre-tax long-lived asset impairment recorded in the third quarter of fiscal 2022 related to the Canadian retail business, which heavily impacted prior year earnings. For the first nine months of fiscal 2023, net sales decreased by 9.2% to $67.8 billion. The company generated $7.0 billion in cash flow from operations, utilizing $1.3 billion for capital expenditures and returning significant capital to shareholders through $1.6 billion in share repurchases and $642 million in dividends during the third quarter. Despite the top-line pressure, Lowe's remains focused on strategic priorities, including enhancing its Pro offering, expanding its rural and outlet store formats, and improving customer experience through expedited fulfillment and delivery options. The company also continues to benefit from its Perpetual Productivity Improvement initiatives.

Key Highlights

  • 1Third quarter net sales declined 12.8% to $20.5 billion, with comparable sales decreasing 7.4%, primarily due to lower DIY discretionary spending.
  • 2Net earnings for the third quarter surged to $1.8 billion ($3.06 per diluted share) from $154 million ($0.25 per diluted share) in the prior year, heavily influenced by a significant asset impairment in Q3 2022.
  • 3The company achieved positive comparable sales growth with its Pro customers, highlighting progress in its strategic investments to improve Pro services and loyalty programs.
  • 4For the nine months ended November 3, 2023, cash flow from operating activities was $7.0 billion.
  • 5Capital expenditures for the nine months were $1.3 billion, with guidance for full-year capital expenditures up to $2.0 billion.
  • 6Lowe's returned significant capital to shareholders, repurchasing $1.6 billion of common stock and paying $642 million in dividends in the third quarter.
  • 7The company is focused on strategic priorities including expanding rural and outlet store formats and enhancing customer experience through improved fulfillment and delivery.

Frequently Asked Questions

The primary driver for the decrease in net sales in the third quarter was a 7.4% decline in comparable sales, which was largely due to reduced DIY discretionary spending as consumers navigate the current macroeconomic environment. The sale of the Canadian retail business also contributed to the year-over-year decline in total sales.

Profitability has significantly improved year-over-year. Net earnings for the third quarter of fiscal 2023 were $1.8 billion, a substantial increase from $154 million in the third quarter of fiscal 2022. This improvement is largely due to the absence of a $2.1 billion pre-tax long-lived asset impairment recorded in the prior year's third quarter related to the Canadian retail business.

Lowe's is focusing on delivering value and convenience through initiatives like its 'Lowest Price Guarantee'. The company is also enhancing its Pro customer offering, including its MVP Pro rewards program, improving job site delivery, and optimizing in-store and online experiences. Additionally, the expansion of rural store formats and Lowe's Outlet stores aims to cater to different customer needs and value preferences.

Lowe's generated $7.0 billion in operating cash flow for the nine months ended November 3, 2023. The company continues to invest in its business with $1.3 billion in capital expenditures during the same period, with full-year guidance up to $2.0 billion. Furthermore, Lowe's is actively returning capital to shareholders through share repurchases, including $1.6 billion in the third quarter, and dividends, with $642 million paid in the third quarter. The company has $15.0 billion remaining available under its share repurchase program.