LOWE'S REPORTS SECOND QUARTER 2024 SALES AND EARNINGS RESULTS

Rhea-AI Summary

Lowe's Companies, Inc. (NYSE: LOW) reported second quarter 2024 results with net earnings of $2.4 billion and diluted EPS of $4.17. Adjusted diluted EPS, excluding a $43 million pre-tax gain from the Canadian retail business sale, was $4.10. Total sales decreased to $23.6 billion from $25.0 billion in the prior-year quarter, with comparable sales declining 5.1%. The company faced challenges in DIY bigger ticket discretionary spending and unfavorable weather impacting seasonal sales. However, Lowe's saw positive comparable sales in Pro and online segments. The company repurchased 4.4 million shares for $1.0 billion and paid $629 million in dividends. Due to lower-than-expected DIY sales and a pressured macroeconomic environment, Lowe's has updated its full year 2024 outlook.

Positive

• Positive comparable sales in Pro and online segments
• Strong operating performance and improved customer service despite challenges
• Continued share repurchases and dividend payments

Negative

• Total sales decreased to $23.6 billion from $25.0 billion year-over-year
• Comparable sales declined 5.1%
• Challenging macroeconomic backdrop, especially for homeowners
• Pressure in DIY bigger ticket discretionary spending
• Unfavorable weather impacting seasonal and outdoor category sales
• Updated (likely lowered) full year 2024 outlook

Insights

Financial Analyst

Lowe's Q2 2024 results reveal a challenging quarter with notable declines. $23.6 billion in total sales represents a 5.6% decrease year-over-year. The 5.1% drop in comparable sales is concerning, primarily attributed to reduced DIY discretionary spending and unfavorable weather impacting seasonal categories. However, the Pro segment and online sales showed positive growth, offering a silver lining.

Adjusted diluted EPS of $4.10 (excluding a one-time gain) marks a 10.1% decrease from Q2 2023's $4.56. This decline in profitability, coupled with the sales decrease, suggests margin pressure and potential operational challenges. The company's continued share repurchases ($1.0 billion) and dividend payments ($629 million) demonstrate confidence in its financial position, but may raise questions about capital allocation strategy in a challenging environment.

The updated full-year outlook indicates management's cautious stance on near-term prospects, particularly in the DIY segment. Investors should closely monitor Lowe's ability to navigate the pressured macroeconomic environment and its progress in the Pro customer segment as potential catalysts for future performance.

Market Research Analyst

Lowe's Q2 results highlight the divergence in consumer behavior between DIY and Pro segments. The decline in DIY bigger ticket discretionary spending suggests consumers are becoming more cautious with home improvement projects, likely due to economic uncertainties and inflationary pressures. This trend could persist if macroeconomic conditions don't improve.

Conversely, the positive comps in the Pro segment indicate resilience in professional demand. This aligns with broader industry trends where professional-led projects are maintaining momentum. Lowe's focus on its Total Home strategy and investments to capture Pro market share could be a key differentiator moving forward.

The impact of unfavorable weather on seasonal sales underscores the vulnerability of retailers to external factors. However, the growth in online sales is encouraging, suggesting Lowe's is making progress in its omnichannel capabilities. As the home improvement market evolves, Lowe's ability to balance its DIY and Pro offerings while enhancing its digital presence will be important for long-term success.

— Diluted EPS of $4.17; Adjusted Diluted EPS¹ of $4.10 —

— Comparable Sales Decreased 5.1% —

— Updates Full Year 2024 Outlook —

MOORESVILLE, N.C., Aug. 20, 2024 /PRNewswire/ -- Lowe's Companies, Inc. (NYSE: LOW) today reported net earnings of $2.4 billion and diluted earnings per share (EPS) of $4.17 for the quarter ended Aug. 2, 2024, compared to diluted EPS of $4.56 in the second quarter of 2023. During the second quarter, the Company recognized a $43 million pre-tax gain associated with the 2022 sale of the Canadian retail business. This positively impacted second quarter diluted EPS by $0.07. Excluding this gain, second quarter 2024 adjusted diluted EPS¹ was $4.10.

Total sales for the quarter were $23.6 billion, compared to $25.0 billion in the prior-year quarter. Comparable sales for the quarter decreased 5.1% driven by continued pressure in DIY bigger ticket discretionary spending and unfavorable weather adversely impacting sales in seasonal and other outdoor categories, partially offset by positive comparable sales in Pro and online.

"The company delivered strong operating performance and improved customer service despite a challenging macroeconomic backdrop, especially for the homeowner.  At the same time, we continue to build momentum with our Total Home strategy reflected by our mid-single-digit positive comps with the Pro customer this quarter," said Marvin R. Ellison, Lowe's chairman, president and CEO. "As we look ahead, we are confident that we are making the right long-term investments to take share when the market recovers.  I'd like to extend my appreciation to our dedicated frontline associates who remain committed to serving our customers."

As of Aug. 2, 2024, Lowe's operated 1,746 stores representing 194.9 million square feet of retail selling space.

Capital Allocation
Through a disciplined capital program, the company continues to deliver long-term, sustainable shareholder value. During the quarter, the company repurchased approximately 4.4 million shares for $1.0 billion, and it paid $629 million in dividends.

Lowe's Business Outlook

Based on lower-than-expected DIY sales and a pressured macroeconomic environment, the company is updating its outlook for the operating results of full year 2024.

Adjusted operating income, adjusted operating margin, adjusted effective income tax rate and adjusted diluted EPS are non-GAAP financial measures that exclude the gain associated with the 2022 sale of the Canadian retail business, recorded in the second quarter. The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items (which may be significant) without unreasonable effort, including timing of adjustments associated with the sale of our Canadian retail business.

Full Year 2024 Outlook

• Total sales of $82.7 to $83.2 billion (previously $84 to $85 billion)
• Comparable sales expected to be down -3.5 to -4.0% as compared to prior year (previously down -2 to -3%)
• Adjusted operating income as a percentage of sales (adjusted operating margin) of 12.4 to 12.5% (previously 12.6 to 12.7%)
• Net interest expense of approximately $1.4 billion
• Adjusted effective income tax rate of approximately 24.5% (previously 25%)
• Adjusted diluted earnings per share of approximately $11.70 to $11.90 (previously $12.00 to $12.30)
• Capital expenditures of approximately $2 billion

A conference call to discuss second quarter 2024 operating results is scheduled for today, Tuesday, Aug. 20, 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 Second Quarter 2024 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 the United States. With total fiscal year 2023 sales of more than $86 billion, Lowe's operates over 1,700 home improvement stores and employs approximately 300,000 associates. Based in Mooresville, N.C., Lowe's supports the communities it serves through programs focused on creating safe, affordable housing and helping to develop the next generation of skilled trade experts. For more information, visit Lowes.com.

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 and social 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, macroeconomic conditions and consumer spending, share repurchases, and 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 U.S. and world financial markets and the consequent reduced availability and/or higher cost of borrowing to Lowe's and its customers, slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending, inflation and its impacts on discretionary spending and on our costs, shortages, and other disruptions in the labor supply, interest rate and currency fluctuations, home price appreciation or decreasing housing turnover, age of housing stock, the availability of consumer credit and of mortgage financing, trade policy changes or additional tariffs, outbreaks of pandemics, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural disasters, geopolitical or armed conflicts, acts of both domestic and international terrorism, and other factors that can negatively affect our customers.

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

____________________

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.

 ###

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.
Consolidated Statements of Current Earnings and Accumulated Deficit (Unaudited)
In Millions, Except Per Share and Percentage Data
	Three Months Ended								Six Months Ended
	August 2, 2024				August 4, 2023				August 2, 2024				August 4, 2023
Current Earnings	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net sales	$  23,586		100.00		$  24,956		100.00		$  44,950		100.00		$  47,304		100.00
Cost of sales	15,691		66.53		16,557		66.34		29,965		66.66		31,378		66.33
Gross margin	7,895		33.47		8,399		33.66		14,985		33.34		15,926		33.67
Expenses:
Selling, general and administrative	4,025		17.07		4,086		16.38		8,034		17.88		7,912		16.73
Depreciation and amortization	423		1.79		427		1.71		851		1.89		841		1.78
Operating income	3,447		14.61		3,886		15.57		6,100		13.57		7,173		15.16
Interest – net	317		1.34		341		1.36		669		1.49		689		1.45
Pre-tax earnings	3,130		13.27		3,545		14.21		5,431		12.08		6,484		13.71
Income tax provision	747		3.17		872		3.50		1,294		2.88		1,551		3.28
Net earnings	$    2,383		10.10		$    2,673		10.71		$    4,137		9.20		$    4,933		10.43
Weighted average common shares outstanding –      basic	568				584				570				590
Basic earnings per common share (1)	$      4.18				$      4.56				$      7.24				$      8.34
Weighted average common shares outstanding –      diluted	570				585				571				591
Diluted earnings per common share (1)	$      4.17				$      4.56				$      7.23				$      8.32
Cash dividends per share	$      1.15				$      1.10				$      2.25				$      2.15
Accumulated Deficit
Balance at beginning of period	$  (15,188)				$  (15,310)				$  (15,637)				$  (14,862)
Net earnings	2,383				2,673				4,137				4,933
Cash dividends declared	(654)				(641)				(1,283)				(1,266)
Share repurchases	(883)				(2,063)				(1,559)				(4,146)
Balance at end of period	$  (14,342)				$  (15,341)				$  (14,342)				$  (15,341)

(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 $2,377 million for the three months ended August 2, 2024, and $2,666 million for the three months ended August 4, 2023.  Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were $4,127 million for the six months ended August 2, 2024, and $4,920 million for the six months ended August 4, 2023.

 

Lowe's Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
	Three Months Ended								Six Months Ended
	August 2, 2024				August 4, 2023				August 2, 2024				August 4, 2023
	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net earnings	$    2,383		10.10		$    2,673		10.71		$    4,137		9.20		$    4,933		10.43
Foreign currency translation adjustments – net of tax	—		—		5		0.01		—		—		5		0.01
Cash flow hedges – net of tax	(3)		(0.01)		(3)		(0.01)		(6)		(0.01)		(6)		(0.02)
Other	2		0.01		—		—		1		—		—		—
Other comprehensive (loss)/income	(1)		—		2		—		(5)		(0.01)		(1)		(0.01)
Comprehensive income	$    2,382		10.10		$    2,675		10.71		$    4,132		9.19		$    4,932		10.42

 

Lowe's Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data
		August 2, 2024		August 4, 2023
Assets
Current assets:
Cash and cash equivalents		$                        4,360		$                        3,494
Short-term investments		330		374
Merchandise inventory – net		16,841		17,422
Other current assets		806		946
Total current assets		22,337		22,236
Property, less accumulated depreciation		17,515		17,373
Operating lease right-of-use assets		3,819		3,650
Long-term investments		292		182
Deferred income taxes – net		184		230
Other assets		787		850
Total assets		$                      44,934		$                      44,521
Liabilities and shareholders' deficit
Current liabilities:
Current maturities of long-term debt		$                        1,290		$                           592
Current operating lease liabilities		552		534
Accounts payable		10,336		10,333
Accrued compensation and employee benefits		1,055		1,026
Deferred revenue		1,417		1,566
Other current liabilities		3,596		3,561
Total current liabilities		18,246		17,612
Long-term debt, excluding current maturities		34,659		35,839
Noncurrent operating lease liabilities		3,738		3,611
Deferred revenue – Lowe's protection plans		1,256		1,231
Other liabilities		798		960
Total liabilities		58,697		59,253
Shareholders' deficit:
Preferred stock, $5 par value: Authorized – 5.0 million shares; Issued and outstanding – none		—		—
Common stock, $0.50 par value: Authorized – 5.6 billion shares; Issued and outstanding – 568 million and 582 million, respectively		284		291
Capital in excess of par value		—		12
Accumulated deficit		(14,342)		(15,341)
Accumulated other comprehensive income		295		306
Total shareholders' deficit		(13,763)		(14,732)
Total liabilities and shareholders' deficit		$                      44,934		$                      44,521

 

Lowe's Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
	Six Months Ended
	August 2, 2024		August 4, 2023
Cash flows from operating activities:
Net earnings	$                        4,137		$                        4,933
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	967		941
Noncash lease expense	260		241
Deferred income taxes	66		23
(Gain)/loss on property and other assets – net	(4)		23
Gain on sale of business	(43)		(67)
Share-based payment expense	110		113
Changes in operating assets and liabilities:
Merchandise inventory – net	53		1,109
Other operating assets	129		224
Accounts payable	1,679		(191)
Other operating liabilities	61		(1,381)
Net cash provided by operating activities	7,415		5,968
Cash flows from investing activities:
Purchases of investments	(628)		(878)
Proceeds from sale/maturity of investments	571		811
Capital expenditures	(808)		(765)
Proceeds from sale of property and other long-term assets	22		17
Proceeds from sale of business	43		123
Other – net	—		(23)
Net cash used in investing activities	(800)		(715)
Cash flows from financing activities:
Net change in commercial paper	—		(499)
Net proceeds from issuance of debt	—		2,983
Repayment of debt	(47)		(45)
Proceeds from issuance of common stock under share-based payment plans	84		76
Cash dividend payments	(1,262)		(1,257)
Repurchases of common stock	(1,930)		(4,356)
Other – net	(21)		(9)
Net cash used in financing activities	(3,176)		(3,107)
Net increase in cash and cash equivalents	3,439		2,146
Cash and cash equivalents, beginning of period	921		1,348
Cash and cash equivalents, end of period	$                        4,360		$                        3,494

Lowe's Companies, Inc.
Non-GAAP Financial Measure Reconciliation (Unaudited)

To provide additional transparency, the Company has presented the non-GAAP financial measure of adjusted diluted earnings per share for the three months ended August 2, 2024.  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 operational performance for the second quarter of fiscal 2024.

Fiscal 2024 Impacts

During fiscal 2024, the Company recognized financial impacts from the following, not contemplated in the Company's Business Outlook for fiscal 2024:

• In the second quarter of fiscal 2024, the Company recognized pre-tax income of $43 million consisting of a realized gain on the contingent consideration associated with the fiscal 2022 sale of the Canadian retail business (Canadian retail business transaction).

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
	August 2, 2024
	Pre-Tax Earnings		Tax1		Net Earnings
Diluted earnings per share, as reported					$       4.17
Non-GAAP adjustments – per share impacts
Canadian retail business transaction	(0.07)		—		(0.07)
Adjusted diluted earnings per share					$       4.10

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 was Lowe's (LOW) diluted EPS for Q2 2024?

Lowe's reported diluted EPS of $4.17 for Q2 2024, with adjusted diluted EPS of $4.10 excluding a gain from the Canadian retail business sale.

How did Lowe's (LOW) comparable sales perform in Q2 2024?

Lowe's comparable sales decreased by 5.1% in Q2 2024, driven by pressure in DIY discretionary spending and unfavorable weather impacting seasonal sales.

Did Lowe's (LOW) update its full year 2024 outlook?

Yes, Lowe's updated its full year 2024 outlook due to lower-than-expected DIY sales and a pressured macroeconomic environment.

How many stores did Lowe's (LOW) operate as of August 2, 2024?

As of August 2, 2024, Lowe's operated 1,746 stores, representing 194.9 million square feet of retail selling space.