Sales for the quarter increased 17.3 percent to $10.2
billion, up from $8.7 billion in the second quarter of 2003. Comparable
store sales for the second quarter increased 5.1 percent. For the six
months ended July 30, 2004, sales increased 19.4 percent to $18.9 billion.
Comparable store sales increased 7.2 percent in the first half of 2004.
"Robust housing turnover, record home ownership, attractive mortgage
rates and improving consumer confidence highlighted a solid performance in
the second quarter where our stores delivered record earnings," explained
Robert L. Tillman, Lowe's chairman and CEO. "A strong and vibrant housing
market, combined with the commitment of our employees to provide excellent
customer service, are the foundations for our confidence in the future."
"Following a solid start to the quarter, sales weakened in June as
several factors, including adverse weather in many parts of the country,
impacted consumers' ability to initiate typical late spring and early
summer projects," said Lowe's President Robert A. Niblock. "Sales
rebounded in July, and we were pleased with the direction of business as
the quarter concluded. We continue to invest in our stores and enhance
displays with product resets, ensuring a great shopping environment for
our customers. As our merchants continue to drive innovation and our
stores provide excellent service, we're confident that we have the
programs in place to deliver strong results in the second half of 2004."
During the quarter, Lowe's opened 20 new stores including 3
relocations. As of July 30, 2004, Lowe's operated 997 stores in 45 states
representing 113.8 million square feet of retail selling space, a 14.2
percent increase over last year.
A conference call to discuss second quarter 2004 operating results is
scheduled for today (Monday, August 16) at 9:00 a.m. EDT. Please dial
888-817-4020 (international callers dial 706-679-6090) to participate. A
webcast of the call will take place simultaneously and can be accessed by
visiting Lowe's website at
http://www.Lowes.com/investor and clicking on Lowe's Second Quarter
2004 Earnings Conference Call Webcast. A replay of the call will be
archived on Lowes.com for seven days.
Lowe's Business Outlook
This outlook is based on current expectations and
includes "forward- looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the company currently
believes that comments reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to
be correct.
Third Quarter 2004 (comparisons to third quarter 2003)
* The company expects to open 33 stores reflecting
square footage growth
of approximately 13 percent
* Total sales are expected to increase approximately 15
percent
* The company expects to report a comparable store
sales increase of 3 to
4 percent
* Operating margin (defined as gross margin less SG&A
and depreciation)
is expected to remain approximately flat to
last year as a percent of
sales
* Store opening costs are expected to be approximately
$35 million
* Diluted earnings per share of $0.65 to $0.66 are
expected
* Lowe's third quarter ends on October 29, 2004 with
operating results to
be publicly released on Monday, November
15, 2004
Fiscal Year 2004 (comparisons to fiscal year 2003)
* The company expects to open 140 stores in 2004
reflecting total square
footage growth of approximately 14 percent
* Total sales are expected to increase approximately 18
percent for the
year
* The company expects to report a comparable store
sales increase of
approximately 6 percent
* Including the estimated 60 basis point negative
impact of EITF 02-16,
operating margin (defined as gross margin
less SG&A and depreciation)
is expected to decline 25 to 35 basis
points
* Store opening costs are expected to be approximately
$128 million
* Including the estimated $0.16 impact of EITF 02-16,
diluted earnings
per share of $2.69 to $2.71 are expected
for the fiscal year ending
January 28, 2005. Excluding the
impact of the accounting change,
diluted earnings per share of $2.85 to
$2.87 would be expected. Our
presentation of this measure is intended to
allow investors to compare
our projected fiscal 2004 performance with
that in fiscal 2003.
This news release includes "forward-looking
statements" within the meaning the Private Securities Litigation Reform
Act of 1995 (the "Act"). Statements of the Company's expectations for
sales growth, earnings and performance, capital expenditures, store
openings, demand for services, and any statement of an assumption
underlying any of the foregoing, constitute "forward-looking statements"
under the Act. Although the Company believes that the expectations,
opinions, projections, and comments reflected in its forward- looking
statements are reasonable, it can give no assurance that such statements
will prove to be correct. A wide-variety of potential risks,
uncertainties, and other factors could materially affect our ability to
achieve the results expressed or implied by our forward-looking statements
including, but not limited to, fluctuations in and the overall condition
of the U.S. economy, environment affecting new store development, the
Company's ability to attract, train, and retain highly-qualified
personnel, stability of costs and availability of sourcing channels, the
Company's ability to manage its growth and respond to competition, impact
of regulatory and legal matters, and the Company's ability to absorb lost
sales resulting from unanticipated weather conditions. Additional
information regarding these and other risks and uncertainties are provided
in our periodic filings with the Securities and Exchange Commission. The
forward-looking statements contained in this news release speak only as of
the date of this release and the Company does not assume any obligation to
update any such statements.
With fiscal year 2003 sales of $30.8 billion, Lowe's Companies, Inc. is
a FORTUNE 50 company that serves approximately 10 million customers a week
at more than 975 home improvement stores in 45 states. In 2004, FORTUNE
named Lowe's America's Most Admired Specialty Retailer for a second
consecutive year. Based in Mooresville, N.C., the 58-year old company is
the second largest home improvement retailer in the world. For more
information, visit Lowes.com.
Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings (Unaudited)
In Millions, Except Per Share Data
Three Months Ended
July 30, 2004 August 1, 2003
Current Earnings Amount Percent Amount Percent
Net sales $10,169 100.00 $8,666 100.00
Cost of sales 6,780 66.68 6,040 69.70
Gross margin 3,389 33.32 2,626 30.30
Expenses:
Selling, general and administrative 1,967 19.34 1,416 16.34
Store opening costs 18 0.17 27 0.31
Depreciation 216 2.13 184 2.12
Interest 45 0.44 45 0.52
Total expenses 2,246 22.08 1,672 19.29
Pre-tax earnings 1,143 11.24 954 11.01
Income tax provision 439 4.32 360 4.16
Earnings from continuing operations 704 6.92 594 6.85
Earnings from discontinued operations,
net of tax - 0.00 3 0.04
Net earnings $704 6.92 $597 6.89
Weighted average shares outstanding -
Basic 776 784
Basic Earnings Per Share
Continuing operations $0.91 $0.76
Discontinued operations - -
Basic earnings per share $0.91 $0.76
Weighted average shares outstanding -
Diluted 796 804
Diluted Earnings Per Share
Continuing operations $0.89 $0.75
Discontinued operations - -
Diluted earnings per share $0.89 $0.75
Retained Earnings
Balance at beginning of period $8,109 $6,288
Net earnings 704 597
Cash dividends (31) (20)
Balance at end of period $8,782 $6,865
Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings (Unaudited)
In Millions, Except Per Share Data
Six Months Ended
July 30, 2004 August 1, 2003
Current Earnings Amount Percent Amount Percent
Net sales $18,850 100.00 $15,784 100.00
Cost of sales 12,591 66.80 10,939 69.30
Gross margin 6,259 33.20 4,845 30.70
Expenses:
Selling, general and administrative 3,821 20.27 2,715 17.20
Store opening costs 39 0.21 46 0.29
Depreciation 424 2.25 363 2.30
Interest 93 0.49 93 0.59
Total expenses 4,377 23.22 3,217 20.38
Pre-tax earnings 1,882 9.98 1,628 10.32
Income tax provision 723 3.83 615 3.90
Earnings from continuing operations 1,159 6.15 1,013 6.42
Earnings from discontinued operations,
net of tax - 0.00 4 0.03
Net earnings $1,159 6.15 $1,017 6.45
Weighted average shares outstanding -
Basic 781 783
Basic Earnings Per Share
Continuing operations $1.48 $1.30
Discontinued operations - -
Basic earnings per share $1.48 $1.30
Weighted average shares outstanding -
Diluted 802 803
Diluted Earnings Per Share
Continuing operations $1.45 $1.27
Discontinued operations - -
Diluted earnings per share $1.45 $1.27
Retained Earnings
Balance at beginning of period $7,677 $5,887
Net earnings 1,159 1,017
Cash dividends (54) (39)
Balance at end of period $8,782 $6,865
Lowe's Companies, Inc.
Consolidated Statements of Earnings, Actual and Pro Forma (Unaudited)
In Millions, Except Per Share Data
Three Months Ended
Pro Pro Forma
Actual Forma Adjusted* Actual
July 30, Adjust- July 30, August 1,
Current Earnings 2004 ments* 2004 2003
Net sales $10,169 $- $10,169 $8,666
Cost of sales 6,780 314 7,094 6,040
Gross margin 3,389 (314) 3,075 2,626
Expenses:
Selling, general and administrative 1,967 (322) 1,645 1,416
Store opening costs 18 - 18 27
Depreciation 216 - 216 184
Interest 45 - 45 45
Total expenses 2,246 (322) 1,924 1,672
Pre-tax earnings 1,143 8 1,151 954
Income tax provision 439 3 442 360
Earnings from continuing operations 704 5 709 594
Earnings from discontinued operations,
net of tax - - - 3
Net earnings $704 $5 $709 $597
Shares outstanding - Basic 776 776 776 784
Basic earnings per share:
Continuing operations $0.91 $0.01 $0.92 $0.76
Discontinued operations - - - -
Basic earnings per share $0.91 $0.01 $0.92 $0.76
Shares outstanding - Diluted 796 796 796 804
Diluted earnings per share:
Continuing operations $0.89 $0.01 $0.90 $0.75
Discontinued operations - - - -
Diluted earnings per share $0.89 $0.01 $0.90 $0.75
*: Reflects the impact of EITF 02-16 on the Consolidated Statement of
Earnings for the three months ended July 30, 2004.
Six Months Ended
Pro Pro Forma
Actual Forma Adjusted* Actual
July 30, Adjust- July 30, August 1,
Current Earnings 2004 ments* 2004 2003
Net sales $18,850 $- $18,850 $15,784
Cost of sales 12,591 417 13,008 10,939
Gross margin 6,259 (417) 5,842 4,845
Expenses:
Selling, general and administrative 3,821 (630) 3,191 2,715
Store opening costs 39 - 39 46
Depreciation 424 - 424 363
Interest 93 - 93 93
Total expenses 4,377 (630) 3,747 3,217
Pre-tax earnings 1,882 213 2,095 1,628
Income tax provision 723 82 805 615
Earnings from continuing operations 1,159 131 1,290 1,013
Earnings from discontinued operations,
net of tax - - - 4
Net earnings $1,159 $131 $1,290 $1,017
Shares outstanding - Basic 781 781 781 783
Basic earnings per share:
Continuing operations $1.48 $0.17 $1.65 $1.30
Discontinued operations - - - -
Basic earnings per share $1.48 $0.17 $1.65 $1.30
Shares outstanding - Diluted 802 802 802 803
Diluted earnings per share:
Continuing operations $1.45 $0.16 $1.61 $1.27
Discontinued operations - - - -
Diluted earnings per share $1.45 $0.16 $1.61 $1.27
*: Reflects the impact of EITF 02-16 on the Consolidated Statement of
Earnings for the six months ended July 30, 2004.
Lowe's Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data
(Unaudited)(Unaudited)
July 30, August 1, January 30,
2004 2003 2004
Assets
Current assets:
Cash and cash equivalents $840 $1,550 $1,446
Short-term investments 191 137 178
Accounts receivable - net 38 199 131
Merchandise inventory 5,272 4,652 4,584
Deferred income taxes 80 67 59
Other assets 81 66 121
Total current assets 6,502 6,671 6,519
Property, less accumulated depreciation 12,858 10,955 11,945
Long-term investments 155 116 169
Other assets 217 172 241
Total assets $19,732 $17,914 $18,874
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term debt $34 $73 $77
Accounts payable 2,471 2,468 2,227
Accrued salaries and wages 250 246 335
Other current liabilities 1,978 1,526 1,561
Total current liabilities 4,733 4,313 4,200
Long-term debt, excluding current
maturities 3,664 3,684 3,678
Deferred income taxes 726 524 657
Other long-term liabilities 62 20 30
Total liabilities 9,185 8,541 8,565
Shareholders' equity:
Preferred stock - $5 par value,
none issued - - -
Common stock - $.50 par value;
Shares Issued and Outstanding
July 30, 2004 772
August 1, 2003 785
January 30, 2004 787 386 392 394
Capital in excess of par 1,380 2,116 2,237
Retained earnings 8,782 6,865 7,677
Accumulated other comprehensive income (1) - 1
Total shareholders' equity 10,547 9,373 10,309
Total liabilities and shareholders'
equity $19,732 $17,914 $18,874
Lowe's Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Six Months Ended
July 30, August 1,
2004 2003
Cash flows from operating activities:
Net earnings $1,159 $1,017
Earnings from discontinued operations,
net of tax - (4)
Earnings from continuing operations 1,159 1,013
Adjustments to reconcile net earnings from
continuing operations to net cash provided
by operating activities:
Depreciation and amortization 433 373
Deferred income taxes 48 37
Loss on disposition/writedown of
fixed and other assets 10 15
Stock-based compensation expense 41 15
Tax effect of stock options exercised 12 10
Changes in operating assets and
liabilities:
Accounts receivable - net 93 (22)
Merchandise inventory (688) (683)
Other operating assets 40 46
Accounts payable 244 661
Other operating liabilities 364 219
Net cash provided by operating activities
from continuing operations 1,756 1,684
Cash flows from investing activities:
Decrease (Increase) in investment assets:
Short-term investments 71 192
Purchases of long-term investments (78) (247)
Proceeds from sale/maturity of long-term
investments 6 99
Increase in other long-term assets (21) (28)
Fixed assets acquired (1,370) (1,010)
Proceeds from the sale of fixed and other
long-term assets 68 44
Net cash used in investing activities
from continuing operations (1,324) (950)
Cash flows from financing activities:
Net decrease in short-term borrowings - (50)
Repayment of long-term debt (60) (17)
Proceeds from employee stock purchase plan 30 25
Proceeds from stock options exercised 46 48
Cash dividend payments (54) (39)
Repurchase of common stock (1,000) -
Net cash used in financing activities
from continuing operations (1,038) (33)
Net cash used in discontinued operations - (4)
Net (decrease) increase in cash and cash
equivalents (606) 697
Cash and cash equivalents, beginning of period 1,446 853
Cash and cash equivalents, end of period $840 $1,550
SOURCE Lowe's Companies, Inc.
