10-QPeriod: Q2 FY2025

LOWES COMPANIES INC Quarterly Report for Q2 Ended May 3, 2024

Filed May 30, 2024For Securities:LOW

Summary

Lowe's Companies, Inc. reported a decrease in net sales and net earnings for the first quarter of fiscal year 2024 compared to the same period in fiscal year 2023. Net sales fell by 4.4% to $21.4 billion, while net earnings decreased to $1.8 billion from $2.3 billion. Diluted earnings per share also saw a decline to $3.06 from $3.77. This performance reflects a 4.1% decrease in comparable sales, attributed to a 3.1% drop in customer transactions and a 1.0% decrease in average ticket size, indicating ongoing pressure on DIY and discretionary spending. Despite the sales decline, the company highlighted positive comparable sales in specific categories like Lawn & Garden and Building Products, particularly noting strength with Pro customers and growth in online sales. Management emphasized their confidence in the "Total Home" strategy and "Perpetual Productivity Improvement" initiatives to navigate the current macroeconomic environment and position the company for future market share growth. The company also continued its commitment to returning capital to shareholders through share repurchases and dividends, though the pace of share repurchases slowed considerably compared to the prior year's quarter.

Financial Highlights

49 data points
Beta

Revenue

$21.36B

33.2% Gross Margin

Net Income

$1.75B

8.2% Net Margin

EPS (Diluted)

$3.06

Total Assets

$45.37B

Cash & Equivalents

$3.24B

Free Cash Flow

$3.88B

Financial Statements
Beta
Revenue$21.36B
Cost of Revenue$14.27B
Gross Profit$7.09B
SG&A Expenses$4.01B
Operating Income$2.65B
Net Income$1.75B
EPS (Basic)$3.06
EPS (Diluted)$3.06
Shares Outstanding (Basic)571.00M
Shares Outstanding (Diluted)572.00M

Key Highlights

  • 1Net sales for Q1 FY2024 decreased by 4.4% year-over-year to $21.4 billion.
  • 2Net earnings declined by 22.4% to $1.8 billion, with diluted EPS falling to $3.06 from $3.77 in the prior year.
  • 3Comparable sales decreased by 4.1%, driven by a 3.1% decline in transactions and a 1.0% decrease in average ticket.
  • 4The company saw positive comparable sales in Lawn & Garden and Building Products, with strength noted in Pro customer sales.
  • 5Cash flow from operations significantly increased to $4.3 billion, driven by working capital management and timing of tax payments.
  • 6Share repurchases totaled $743 million in Q1 FY2024, a substantial decrease from $2.1 billion in the prior year's quarter.
  • 7Lowe's has $13.9 billion remaining under its share repurchase program.

Frequently Asked Questions

The decline in net sales and earnings is primarily attributed to a decrease in comparable sales, specifically a reduction in customer transactions and average ticket size. This is influenced by ongoing pressure on Do-It-Yourself (DIY) and bigger-ticket discretionary spending within the current macroeconomic environment.

Lowe's generated a significant increase in cash flow from operating activities, reaching $4.3 billion in the quarter, primarily due to working capital management and timing of tax payments. The company continued to return capital through cash dividend payments ($633 million) and share repurchases ($743 million), although the pace of repurchases was lower than the previous year. A substantial $13.9 billion remains authorized for future share repurchases.

Lowe's is focusing on its 'Total Home' strategy, which aims to resonate with customers by offering a comprehensive range of products and services. They are also implementing 'Perpetual Productivity Improvement' initiatives to drive efficiency. Investments in improving service levels for Pro customers and expanding omnichannel fulfillment are key components of their strategy to gain market share and drive shareholder value.

Merchandise inventory decreased from $19.5 billion at the end of Q4 FY2023 to $18.2 billion at the end of Q1 FY2024. The 'Management's Discussion and Analysis' section notes that cash flows related to accounts payable improved significantly due to timing of purchases as they managed inventory replenishment in line with sales trends and a later spring inventory build.