Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $1.2 billion for the quarter ended July 29, 2016, a 3.7 percent increase over the same period a year ago. Diluted earnings per share increased 9.2 percent to $1.31 from $1.20 in the second quarter of 2015. For the six months ended July 29, 2016, net earnings increased 14.0 percent from the same period a year ago to $2.1 billion, and diluted earnings per share increased 20.5 percent to $2.29.
The second quarter results include a loss on a foreign currency hedge entered into in advance of the company’s acquisition of RONA, inc. (RONA), which decreased pre-tax earnings for the second quarter by $84 million and diluted earnings per share by $0.06. The six month period includes a net gain on the settlement of the foreign currency hedge, which increased pre-tax earnings by $76 million and diluted earnings per share by $0.05.
Sales for the second quarter increased 5.3 percent to $18.3 billion from $17.3 billion in the second quarter of 2015, and comparable sales increased 2.0 percent. For the six month period, sales were $33.5 billion, a 6.4 percent increase over the same period a year ago, and comparable sales increased 4.4 percent. Comparable sales for the U.S. home improvement business increased 1.9 percent for the second quarter and 4.4 percent for the six month period.
«We delivered solid results for the first half of the year, in line with our expectations,» commented Robert A. Niblock, Lowe’s (LOW) chairman, president and CEO. «We believe we are well positioned to capitalize on a favorable macroeconomic backdrop for home improvement in the second half of this year as we continue to execute on our strategic priorities to provide better omni-channel experiences, deepen our relationships with professional customers, and drive productivity and profitability.
«I would like to express my appreciation for our employees’ unwavering commitment to serving customers, enabling us to provide inspiration and support whenever and wherever they shop and positioning Lowe’s as the project authority in our industry,» Niblock added. «We are also very pleased to welcome RONA’s talented team into the Lowe’s family following the completion of the acquisition on May 20, 2016.»
Delivering on its commitment to return excess cash to shareholders, the company repurchased $1.2 billion of stock under its share repurchase program and paid $251 million in dividends in the second quarter. For the six month period, the company repurchased $2.4 billion of stock under its share repurchase program and paid $506 million in dividends.
As of July 29, 2016, Lowe’s operated 2,108 home improvement and hardware stores in the United States, Canada and Mexico representing 211.9 million square feet of retail selling space.
Lowe’s Business Outlook
The company is updating its Fiscal Year 2016 Business Outlook to reflect the impact of the acquisition of RONA, which was completed in May 2016. There have been no other changes to the Business Outlook presented below.
Fiscal Year 2016 — a 53-week Year (comparisons to fiscal year 2015 — a 52-week year; based on U.S. GAAP unless otherwise noted)
Total sales are expected to increase approximately 10 percent, including the 53rd week
The 53rd week is expected to increase total sales by approximately 1.5 percent
Comparable sales are expected to increase approximately 4 percent
The company expects to add approximately 45 home improvement and hardware stores.
Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 50 basis points.
The effective income tax rate is expected to be approximately 38.1%.
Diluted earnings per share of approximately $4.06 are expected for the fiscal year ending February 3, 2017.
Cautionary Note Regarding Forward-Looking Statements
Lowe’s Companies, Inc.
Lowe’s Companies, Inc. (NYSE: LOW) is a FORTUNE® 50 home improvement company serving more than 17 million customers a week in the United States, Canada and Mexico. With fiscal year 2015 sales of $59.1 billion, Lowe’s and its related businesses operate or service more than 2,355 home improvement and hardware stores and employ over 285,000 employees. Founded in 1946 and based in Mooresville, N.C., Lowe’s supports the communities it serves through programs that focus on K-12 public education and community improvement projects. For more information, visit Lowes.com.
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