Lowe’s 2Q Profits Up, Sales Down

Lowe’s 2Q Profits Up, Sales Down

MOORESVILLE, N.C. — Lowe’s Companies, Inc. today reported net earnings of $3.0 billion, in line with prior-year results, and diluted earnings per share (EPS) of $4.67 for the quarter ended July 29, 2022, compared to diluted EPS of $4.25 in the second quarter of 2021.

Total sales for the second quarter were $27.5 billion compared to $27.6 billion in the second quarter of 2021, and comparable sales decreased 0.3%. Comparable sales for the U.S. home improvement business increased 0.2% for the second quarter. DIY sales were impacted by the shortened spring and lower demand in certain discretionary categories, which was partially offset by a 13% increase in Pro customer sales.

“I am pleased that our team drove operating margin improvement and effectively managed inventory despite lower-than-expected sales – a clear reflection of our relentless focus on operating discipline and productivity,” commented Marvin R. Ellison, Lowe’s chairman, president and CEO. “Our results in the first half were disproportionately impacted by our 75% DIY customer mix, which was partially offset by our double-digit Pro growth for the ninth consecutive quarter. Despite continued macro uncertainty, we remain confident in the long-term strength of the home improvement market and our ability to take share. To help our hourly front-line associates during this period of high inflation, we are awarding an incremental bonus of $55 million. I’d like to thank our associates for their continued hard work and dedication.”

Capital Allocation
With a disciplined focus on its best-in-class capital allocation program, the company continues to create sustainable value for its shareholders. During the quarter, the company repurchased approximately 21.6 million shares for $4.0 billion, and it paid $524 million in dividends.

As of July 29, 2022, Lowe’s operated 1,969 home improvement and hardware stores in the U.S. and Canada representing 208 million square feet of retail selling space, and it serviced approximately 212 dealer-owned stores.

Lowe’s Business Outlook
The company now expects full year 2022 total and comparable sales toward the bottom end of its outlook range, and expects operating income and diluted EPS toward the top end of its outlook range. This reflects first half sales performance and expectations for continued Pro strength and improving DIY trends. It also reflects the company’s disciplined expense management and benefits of its productivity initiatives.

Full Year 2022 Outlook – a 53-week Year (comparisons to full year 2021 – a 52-week year)

  • Total sales of $97 billion to $99 billion, including the 53rd week
  • 53rd week expected to increase total sales by approximately $1.0 billion to $1.5 billion
  • Comparable sales expected to range from a decline of -1% to an increase of 1%
  • Gross margin rate up slightly compared to prior year
  • Depreciation and amortization of approximately $1.75 billion
  • Operating income as a percentage of sales (operating margin) of 12.8% to 13.0%
  • Interest expense of $1.1 to $1.2 billion (previously $1.0 to $1.1 billion)
  • Effective income tax rate of approximately 25%
  • Diluted earnings per share of $13.10 to $13.60
  • Total share repurchases of approximately $12 billion
  • ROIC of over 36%
  • Capital expenditures of approximately $2 billion
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