US Stores Boost Sales Growth At Lowe's

Lowe's Companies, Inc. (NYSE: LOW) today reported net earnings of $509 million and diluted earnings per share of $0.66 for the quarter ended Jan. 31, 2020, which included pre-tax operating costs and charges of $185 million further described below, compared to a net loss of $824 million and diluted loss per share of ($1.03) in the fourth quarter of 2018.  Excluding the impact of these charges, adjusted diluted earnings per share1 increased 17.5 percent to $0.94 from adjusted diluted earnings per share1 of $0.80 in the fourth quarter of 2018.

The pre-tax operating costs and charges referenced above resulted from the company's previously disclosed strategic review of its Canadian operations and closure of its Mexico business, resulting in pre-tax operating costs and charges of $185 million consisting of inventory liquidation, accelerated depreciation and amortization, severance and other costs.

Sales for the fourth quarter were $16.0 billion compared to $15.6 billion in the fourth quarter of 2018, and comparable sales increased 2.5 percent.  Comparable sales for the U.S. home improvement business increased 2.6 percent for the fourth quarter.

"In the fourth quarter, we delivered profitability that exceeded our expectations given strong expense management, improving gross margin and enhanced process execution.  Our sales growth was driven almost entirely by our U.S. brick and mortar stores, supported by our investments in technology, store environment and the Pro business. We have a detailed road map in place to modernize our e-commerce platform and accelerate Lowes.com sales, which combined with the sales productivity improvement in our physical stores, underscores our opportunity to unlock additional growth," commented Marvin R. Ellison, Lowe's president and CEO.  

"Though we are only one year into a multi-year plan, we made significant progress transforming our company and believe we are well positioned to capitalize on solid demand in a healthy home improvement market. We are entering 2020 from a position of strength and remain confident that our focus on retail fundamentals combined with technology improvements will continue to pay dividends across the business. I would like to thank all of our associates for their continued commitment to serving customers," added Ellison.

1 Adjusted diluted earnings per share, adjusted operating income and adjusted operating margin are non-GAAP financial measures. 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.

Delivering on its commitment to return excess cash to shareholders, the company repurchased $670 million of stock under its share repurchase program and paid $423 million in dividends in the fourth quarter.

As of Jan 31, 2020, Lowe's operated 1,977 home improvement and hardware stores in the United States and Canada representing 208.2 million square feet of retail selling space.

A conference call to discuss fourth quarter 2019 operating results is scheduled for today (Wednesday, Feb. 26) at 9:00 am ET.  The conference call will be available by webcast and can be accessed by visiting Lowe's website at www.Lowes.com/investor and clicking on Lowe's Fourth Quarter 2019 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 on Lowes.com/investor until May 20, 2020.

Lowe's Business Outlook

Fiscal Year 2020 (comparisons to fiscal year 2019)

• Total sales growth of approximately 2.5 to 3.0 percent.
• Comparable sales growth of approximately 3.0 to 3.5 percent.
• Operating income growth of approximately 12 to 16 percent.
• Adjusted operating income1 growth of approximately 8 to 12 percent.
• Operating income as a percentage of sales (operating margin) increase of approximately 80 to 100 basis points.
• Adjusted operating income1 as a percentage of sales (adjusted operating margin1) increase of approximately 50 to 70 basis points.
• Effective income tax rate and adjusted effective income tax rate of approximately 24.5%.
• Target leverage ratio of 2.75x, therefore the company expects to repurchase approximately $5 billion of stock.
• Diluted earnings per share of $6.38 to $6.58.
• Adjusted diluted earnings per share1 of $6.45 to $6.65.

Source : Lowe's

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