LOWE'S REPORTS FOURTH QUARTER 2023 SALES AND EARNINGS RESULTS
- Lowe's reported strong net earnings and diluted EPS for Q4 2023
- Total sales for the quarter were $18.6 billion, with a decrease in comparable sales by 6.2%
- The company repurchased shares worth $404 million and paid $633 million in dividends in Q4
- Lowe's outlook for FY 2024 includes total sales of $84 to $85 billion and a projected diluted EPS of $12.00 to $12.30
- Comparable sales decreased by 6.2% due to a slowdown in DIY demand and unfavorable weather conditions
- Lowe's projects a decline in comparable sales of -2 to -3% for FY 2024
Insights
The reported decrease in comparable sales by 6.2% at Lowe's Companies, Inc. is a significant indicator of the company's performance, especially when contrasted with the previous year's adjusted diluted EPS. The flat performance in Pro customer sales, amidst a downturn in DIY demand, suggests a shift in consumer behavior which could have implications for future revenue streams. The repurchase of shares and payment of dividends, totaling $8.9 billion returned to shareholders, reflects a strong commitment to shareholder value but also raises questions about the efficiency of capital allocation during a period of declining sales.
Furthermore, the introduction of the full year 2024 outlook in the context of macroeconomic uncertainty suggests a cautious approach by the management. The projected decline in comparable sales of -2 to -3% indicates that the company is not expecting a quick turnaround in market conditions. The anticipated operating margin and EPS provide a glimpse into the company's profitability expectations, which are critical for investors assessing the company's future performance.
The home improvement sector is sensitive to economic cycles and consumer confidence. Lowe's performance, particularly the decrease in comparable sales, can be seen as a barometer for the sector and consumer spending on home improvement. The slowdown in DIY demand, as mentioned, could be attributed to a variety of factors, including market saturation, changes in consumer spending habits, or broader economic pressures. It's important to analyze how Lowe's is adapting its Total Home strategy to address these shifts and whether their investments are poised to capture market share in a potentially contracting market.
The mention of a $140 million bonus to frontline associates underscores the company's focus on customer satisfaction and employee retention, which can be crucial for maintaining service quality and operational efficiency in retail. This investment in human capital, while commendable for corporate culture, will likely be scrutinized in terms of its impact on operational costs and margins.
The provided outlook for Lowe's reflects broader economic trends and uncertainties, which could be indicative of consumer spending patterns and the housing market's health. The home improvement industry often correlates with housing market trends and a decrease in comparable sales might suggest a cooling period. This could be due to various factors such as higher interest rates, reduced home sales, or a general economic slowdown. The effective income tax rate and interest expense projections are key figures that tie into the overall economic environment and can affect net profitability.
Capital expenditures of approximately $2 billion suggest that Lowe's is continuing to invest in its business, which could include store improvements, technology upgrades, or expansion efforts. This level of investment, amidst the forecasted sales decline, highlights a strategic decision to possibly strengthen the company's long-term market position despite short-term headwinds.
— Comparable Sales Decreased
— Provides Full Year 2024 Outlook —
Total sales for the quarter were
Comparable sales3 for the quarter decreased
"This quarter we delivered strong operating profit and improved customer satisfaction, despite the continued pullback in DIY spending," commented Marvin R. Ellison, Lowe's chairman, president and CEO. "We remain confident in the long-term strength of the home improvement market, and we are making the right investments in our Total Home strategy to take share. We are also pleased to award
As of Feb. 2, 2024, Lowe's operated 1,746 stores representing 194.9 million square feet of retail selling space.
Capital Allocation
The company remains committed to a best-in-class capital allocation strategy focused on driving long-term, sustainable shareholder value. During the quarter, the company repurchased approximately 1.9 million shares for
The company also paid
1 Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures Reconciliation" section of this release for additional information, as well as reconciliations between the Company's GAAP and non-GAAP financial results. |
2 Total fourth quarter sales includes an approximately |
3 Comparable sales are based on comparison to weeks 41-53 in 2022. |
Lowe's Business Outlook |
The company is introducing its outlook for full year 2024, which reflects near-term macroeconomic uncertainty.
Full Year 2024 Outlook
- Total sales of
$84 $85 billion - Comparable sales expected to be down -2 to -
3% as compared to prior year - Operating income as a percentage of sales (operating margin) of
12.6% to12.7% - Interest expense of approximately
$1.4 billion - Effective income tax rate of approximately
25% - Diluted earnings per share of approximately
$12.00 $12.30 - Capital expenditures of approximately
$2 billion
A conference call to discuss fourth quarter 2023 operating results is scheduled for today, Tuesday, Feb. 27, at 9 a.m. ET. The conference call will be available by webcast and can be accessed by visiting Lowe's website at ir.lowes.com and clicking on Lowe's Fourth Quarter 2023 Earnings Conference Call Webcast. Supplemental slides will be available approximately 15 minutes prior to the start of the conference call. A replay of the call will be archived at ir.lowes.com.
Lowe's Companies, Inc. |
Lowe's Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home improvement company serving approximately 16 million customer transactions a week in
Disclosure Regarding Forward-Looking Statements |
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believe", "expect", "anticipate", "plan", "desire", "project", "estimate", "intend", "will", "should", "could", "would", "may", "strategy", "potential", "opportunity", "outlook", "scenario", "guidance", and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives (including objectives related to environmental, social, and governance matters), business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services including customer acceptance of new offerings and initiatives, share repurchases, Lowe's strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. Such statements involve risks and uncertainties, and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.
A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as volatility and/or lack of liquidity from time to time in
Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in "Item 1A - Risk Factors" in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the SEC. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.
LOW-IR
Contacts: | Shareholder/Analyst Inquiries: | Media Inquiries: | |
Kate Pearlman | Steve Salazar | ||
704-775-3856 | steve.j.salazar@lowes.com | ||
kate.pearlman@lowes.com |
Lowe's Companies, Inc. | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
February 2, 2024 | February 3, 2023 | February 2, 2024 | February 3, 2023 | ||||||||||||
Current Earnings | Amount | % Sales | Amount | % Sales | Amount | % Sales | Amount | % Sales | |||||||
Net sales | $ 18,602 | 100.00 | $ 22,445 | 100.00 | $ 86,377 | 100.00 | $ 97,059 | 100.00 | |||||||
Cost of sales | 12,576 | 67.60 | 15,189 | 67.67 | 57,533 | 66.61 | 64,802 | 66.77 | |||||||
Gross margin | 6,026 | 32.40 | 7,256 | 32.33 | 28,844 | 33.39 | 32,257 | 33.23 | |||||||
Expenses: | |||||||||||||||
Selling, general and administrative | 3,897 | 20.95 | 5,131 | 22.86 | 15,570 | 18.02 | 20,332 | 20.94 | |||||||
Depreciation and amortization | 442 | 2.38 | 421 | 1.88 | 1,717 | 1.99 | 1,766 | 1.82 | |||||||
Operating income | 1,687 | 9.07 | 1,704 | 7.59 | 11,557 | 13.38 | 10,159 | 10.47 | |||||||
Interest – net | 348 | 1.87 | 322 | 1.43 | 1,382 | 1.60 | 1,123 | 1.16 | |||||||
Pre-tax earnings | 1,339 | 7.20 | 1,382 | 6.16 | 10,175 | 11.78 | 9,036 | 9.31 | |||||||
Income tax provision | 319 | 1.72 | 425 | 1.90 | 2,449 | 2.83 | 2,599 | 2.68 | |||||||
Net earnings | $ 1,020 | 5.48 | $ 957 | 4.26 | $ 7,726 | 8.95 | $ 6,437 | 6.63 | |||||||
Weighted average common shares outstanding – | 574 | 603 | 582 | 629 | |||||||||||
Basic earnings per common share (1) | $ 1.77 | $ 1.58 | $ 13.23 | $ 10.20 | |||||||||||
Weighted average common shares outstanding – | 575 | 605 | 584 | 631 | |||||||||||
Diluted earnings per common share (1) | $ 1.77 | $ 1.58 | $ 13.20 | $ 10.17 | |||||||||||
Cash dividends per share | $ 1.10 | $ 1.05 | $ 4.35 | $ 3.95 | |||||||||||
Accumulated Deficit | |||||||||||||||
Balance at beginning of period | $ (15,744) | $ (13,313) | $ (14,862) | $ (5,115) | |||||||||||
Net earnings | 1,020 | 957 | 7,726 | 6,437 | |||||||||||
Cash dividends declared | (633) | (633) | (2,531) | (2,466) | |||||||||||
Share repurchases | (280) | (1,873) | (5,970) | (13,718) | |||||||||||
Balance at end of period | $ (15,637) | $ (14,862) | $ (15,637) | $ (14,862) | |||||||||||
(1) Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, which is derived by reducing net earnings by the earnings allocable to participating securities. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were |
Lowe's Companies, Inc. | |||||||||||||||
Three Months Ended | Fiscal Year Ended | ||||||||||||||
February 2, 2024 | February 3, 2023 | February 2, 2024 | February 3, 2023 | ||||||||||||
Amount | % Sales | Amount | % Sales | Amount | % Sales | Amount | % Sales | ||||||||
Net earnings | $ 1,020 | 5.48 | $ 957 | 4.26 | $ 7,726 | 8.95 | $ 6,437 | 6.63 | |||||||
Foreign currency translation adjustments – net | — | — | 209 | 0.93 | 5 | 0.01 | 36 | 0.04 | |||||||
Cash flow hedges – net of tax | (4) | (0.02) | (43) | (0.19) | (14) | (0.02) | 309 | 0.32 | |||||||
Other | 2 | 0.01 | 2 | 0.01 | 2 | — | (2) | — | |||||||
Other comprehensive (loss)/income | (2) | (0.01) | 168 | 0.75 | (7) | (0.01) | 343 | 0.36 | |||||||
Comprehensive income | $ 1,018 | 5.47 | $ 1,125 | 5.01 | $ 7,719 | 8.94 | $ 6,780 | 6.99 | |||||||
Lowe's Companies, Inc. | ||||
February 2, 2024 | February 3, 2023 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 921 | $ 1,348 | ||
Short-term investments | 307 | 384 | ||
Merchandise inventory – net | 16,894 | 18,532 | ||
Other current assets | 949 | 1,178 | ||
Total current assets | 19,071 | 21,442 | ||
Property, less accumulated depreciation | 17,653 | 17,567 | ||
Operating lease right-of-use assets | 3,733 | 3,518 | ||
Long-term investments | 252 | 121 | ||
Deferred income taxes – net | 248 | 250 | ||
Other assets | 838 | 810 | ||
Total assets | $ 41,795 | $ 43,708 | ||
Liabilities and shareholders' deficit | ||||
Current liabilities: | ||||
Short-term borrowings | $ — | $ 499 | ||
Current maturities of long-term debt | 537 | 585 | ||
Current operating lease liabilities | 487 | 522 | ||
Accounts payable | 8,704 | 10,524 | ||
Accrued compensation and employee benefits | 954 | 1,109 | ||
Deferred revenue | 1,408 | 1,603 | ||
Income taxes payable | 33 | 1,181 | ||
Other current liabilities | 3,445 | 3,488 | ||
Total current liabilities | 15,568 | 19,511 | ||
Long-term debt, excluding current maturities | 35,384 | 32,876 | ||
Noncurrent operating lease liabilities | 3,737 | 3,512 | ||
Deferred revenue – Lowe's protection plans | 1,225 | 1,201 | ||
Other liabilities | 931 | 862 | ||
Total liabilities | 56,845 | 57,962 | ||
Shareholders' deficit: | ||||
Preferred stock, | — | — | ||
Common stock, | 287 | 301 | ||
Accumulated deficit | (15,637) | (14,862) | ||
Accumulated other comprehensive income | 300 | 307 | ||
Total shareholders' deficit | (15,050) | (14,254) | ||
Total liabilities and shareholders' deficit | $ 41,795 | $ 43,708 | ||
Lowe's Companies, Inc. | |||
Fiscal Year Ended | |||
February 2, 2024 | February 3, 2023 | ||
Cash flows from operating activities: | |||
Net earnings | $ 7,726 | $ 6,437 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 1,923 | 1,981 | |
Noncash lease expense | 499 | 530 | |
Deferred income taxes | 6 | (239) | |
Asset impairment and loss on property – net | 83 | 2,118 | |
(Gain)/loss on sale of business | (79) | 421 | |
Share-based payment expense | 210 | 223 | |
Changes in operating assets and liabilities: | |||
Merchandise inventory – net | 1,637 | (2,594) | |
Other operating assets | 182 | 56 | |
Accounts payable | (1,820) | (549) | |
Deferred revenue | (170) | (183) | |
Other operating liabilities | (2,057) | 388 | |
Net cash provided by operating activities | 8,140 | 8,589 | |
Cash flows from investing activities: | |||
Purchases of investments | (1,785) | (1,189) | |
Proceeds from sale/maturity of investments | 1,722 | 1,174 | |
Capital expenditures | (1,964) | (1,829) | |
Proceeds from sale of property and other long-term assets | 53 | 45 | |
Proceeds from sale of business | 100 | 491 | |
Other – net | (27) | (1) | |
Net cash used in investing activities | (1,901) | (1,309) | |
Cash flows from financing activities: | |||
Net change in commercial paper | (499) | 499 | |
Net proceeds from issuance of debt | 2,983 | 9,667 | |
Repayment of debt | (601) | (867) | |
Proceeds from issuance of common stock under share-based payment plans | 141 | 151 | |
Cash dividend payments | (2,531) | (2,370) | |
Repurchases of common stock | (6,138) | (14,124) | |
Other – net | (21) | (5) | |
Net cash used in financing activities | (6,666) | (7,049) | |
Effect of exchange rate changes on cash | — | (16) | |
Net (decrease)/increase in cash and cash equivalents | (427) | 215 | |
Cash and cash equivalents, beginning of period | 1,348 | 1,133 | |
Cash and cash equivalents, end of period | $ 921 | $ 1,348 | |
Lowe's Companies, Inc.
Non-GAAP Financial Measure Reconciliation (Unaudited)
To provide additional transparency, the Company has presented a comparison to the non-GAAP financial measure of adjusted diluted earnings per share for the three months ended February 3, 2023. This measure excludes the impact of a certain item, further described below, not contemplated in Lowe's Business Outlook to assist analysts and investors in understanding the comparison of operational performance to the fourth quarter of fiscal 2022.
Fiscal 2022 Impacts
During fiscal 2022, the Company recognized financial impacts from the following, not contemplated in the Company's Business Outlook for fiscal 2022:
- In the fourth quarter of fiscal 2022, the Company recognized pre-tax transaction costs totaling
$441 million
Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company's diluted earnings per share as prepared in accordance with GAAP. The Company's methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable.
A reconciliation between the Company's GAAP and non-GAAP financial results is shown below and available on the Company's website at ir.lowes.com.
Three Months Ended | |||||
February 3, 2023 | |||||
Pre-Tax | Tax1 | Net | |||
Diluted earnings per share, as reported | $ 1.58 | ||||
Non-GAAP adjustments – per share impacts | |||||
Canadian retail business transaction | 0.73 | (0.03) | 0.70 | ||
Adjusted diluted earnings per share | $ 2.28 | ||||
1 Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share. |
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SOURCE Lowe's Companies, Inc.
FAQ
What were Lowe's net earnings and diluted EPS for Q4 2023?
How much did Lowe's repurchase shares for in Q4?
What is Lowe's projected diluted EPS range for FY 2024?
What caused the decrease in comparable sales for Lowe's in Q4 2023?
What is Lowe's total sales outlook for FY 2024?
