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Lowe’s Profits Double in 3Q

Lowe’s Profits Double in 3Q

MOORESVILLE, N.C. (AP) — Lowe’s profit more than doubled in the third quarter as Americans along the Gulf Coast loaded up trunks and trucks with material to repair the damage delivered by a pair of gigantic hurricanes.

The company said sales related to hurricanes Irma and Harvey reached $200 million in the quarter, pushing revenue to $16.77 billion. That’s better than the $16.57 billion Wall Street was looking for and it topped last year’s revenue of $15.74 billion.

Net income was $872 million, or $1.05 per share, also besting industry analyst projections by 3 cents per share.

Still, investors were not wowed in premarket trading Tuesday because, unlike rival Home Depot Inc., the storms did not lead higher profit or sales projections.

The Mooresville, North Carolina, home improvement retailer said it expects to earn $4.20 to $4.30 per share this year, the same projections it released in August. That’s below the per-share projections of $4.50 on Wall Street.

Shares slipped 2 percent before the opening bell.

Last week, Home Depot also topped most expectations, but was a lot more optimistic about the year, saying it believes earnings will rise about 14 percent, which is better than industry analysts had expected.

Lowe’s did lower general and administrative costs to $3.81 billion, from $4.08 billion.

Sales at stores open at least a year, a key indicator of a retailer’s health, increased 5.7 percent at Lowe’s, and 5.1 percent in the U.S.

Lowe’s also stuck to expectations that sales would rise about 5 percent and said same-store sales should be up about 3.5 percent.

Company Press Release

Lowe’s Companies, Inc. today reported net earnings of $872 million and diluted earnings per share of $1.05 for the quarter ended Nov. 3, 2017, compared to net earnings of $379 million and diluted earnings per share of $0.43 in the third quarter of 2016.  Diluted earnings per share increased 19.3 percent from adjusted diluted earnings per share1 of $0.88 in the same period a year ago.

For the nine months ended Nov. 3, 2017, net earnings were $2.9 billion and diluted earnings per share were $3.42 compared to net earnings of $2.4 billion and diluted earnings per share of $2.73 in the same period a year ago.  Excluding the loss on extinguishment of debt in the first quarter of 2017 and the gain from the sale of the company’s interest in its Australian joint venture in the second quarter of 2017, adjusted diluted earnings per share1 increased 16.7 percent to $3.64 from adjusted diluted earnings per share1 of $3.12 in the same period a year ago.

Sales for the third quarter increased 6.5 percent to $16.8 billion from $15.7 billion in the third quarter of 2016, and comparable sales increased 5.7 percent. Hurricane-related sales in the quarter were approximately $200 million. For the nine-month period, sales increased 7.9 percent to $53.1 billion over the same period a year ago, and comparable sales increased 4.0 percent. Comparable sales for the U.S. home improvement business increased 5.1 percent for the third quarter and 3.9 percent for the nine-month period.

“During the third quarter, we drove traffic in-store and online with compelling messaging and integrated customer experiences. We continue to invest in omni-channel capabilities to enhance value for customers and shareholders,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “I am also pleased with the progress we’ve made to enhance our product and service offering for the Pro customer, delivering another quarter of comparable sales above the company average.

“I am incredibly proud of our team’s unwavering commitment to serving customers and their communities every day.  This commitment was especially evident this quarter, as our employees mounted the largest natural disaster response in our history. Our merchant, vendor, logistics, and store teams worked together seamlessly to ensure customers had the right products to protect and repair their homes, and we remain committed to helping impacted communities rebuild in the months ahead,” Niblock added.

Delivering on its commitment to return excess cash to shareholders, the company repurchased $500 million of stock under its share repurchase program and paid $344 million in dividends in the third quarter.

As of Nov. 3, 2017, Lowe’s operated 2,144 home improvement and hardware stores in the United States, Canada and Mexico representing 214.2 million square feet of retail selling space.

Lowe’s Business Outlook

Fiscal Year 2017 — a 52-week Year (comparisons to fiscal year 2016 — a 53-week year; based on U.S. GAAP)

  • Total sales are expected to increase approximately 5 percent
  • Comparable sales are expected to increase approximately 3.5 percent
  • The company expects to add approximately 25 home improvement and hardware stores.
  • Operating income as a percentage of sales (operating margin) is expected to increase 80 to 100 basis points. 2
  • The effective income tax rate is expected to be approximately 37%.
  • Diluted earnings per share of $4.20 to $4.30 are expected for the fiscal year ending February 2, 2018; reflective of the loss on extinguishment of debt and the gain from the sale of the company’s interest in its Australian joint venture.

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 Includes the 12 basis points benefit of the net gain on the settlement of the foreign currency hedge entered into in advance of the company’s acquisition of RONA (1Q 2016 and 2Q 2016), the 44 basis points impact of the non-cash charge associated with the joint venture with Woolworths in Australia (3Q 2016), the 15 basis points impact of project write-offs that were a part of the ongoing review of the company’s strategic initiatives (3Q 2016), the 12 basis points impact of goodwill and long-lived asset impairment charges associated with the company’s Orchard Supply Hardware operations (3Q 2016), as well as the 13 basis points impact of severance-related costs associated with the company’s productivity efforts (4Q 2016).

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