☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
North Carolina
|
|
56-0578072
|
|||
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|||
|
|
|
|
|
|
1000 Lowe’s Blvd.
|
|
|
|
||
Mooresville,
|
|
North Carolina
|
|
28117
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|||
|
|
|
|
|
|
Registrant’s telephone number, including area code
|
|
(704)
|
758-1000
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.50 per share
|
LOW
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
Emerging growth company
|
☐
|
CLASS
|
|
OUTSTANDING AT 5/26/2020
|
Common Stock, $0.50 par value
|
|
755,002,775
|
|
|
|
Page No.
|
|
Item 1.
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
Item 2.
|
||
|
Item 3.
|
||
|
Item 4.
|
||
|
Item 1.
|
||
|
Item 1A.
|
||
|
Item 2.
|
||
|
Item 6.
|
||
|
|
|
|
May 1, 2020
|
|
May 3, 2019
|
|
January 31, 2020
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
5,955
|
|
|
$
|
2,973
|
|
|
$
|
716
|
|
Short-term investments
|
|
201
|
|
|
190
|
|
|
160
|
|
|||
Merchandise inventory – net
|
|
14,283
|
|
|
15,026
|
|
|
13,179
|
|
|||
Other current assets
|
|
1,487
|
|
|
1,146
|
|
|
1,263
|
|
|||
Total current assets
|
|
21,926
|
|
|
19,335
|
|
|
15,318
|
|
|||
Property, less accumulated depreciation
|
|
18,501
|
|
|
18,150
|
|
|
18,669
|
|
|||
Operating lease right-of-use assets
|
|
3,876
|
|
|
3,926
|
|
|
3,891
|
|
|||
Long-term investments
|
|
300
|
|
|
235
|
|
|
372
|
|
|||
Deferred income taxes – net
|
|
215
|
|
|
495
|
|
|
216
|
|
|||
Other assets
|
|
1,014
|
|
|
1,078
|
|
|
1,005
|
|
|||
Total assets
|
|
$
|
45,832
|
|
|
$
|
43,219
|
|
|
$
|
39,471
|
|
|
|
|
|
|
|
|
||||||
Liabilities and shareholders' equity
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
||||||
Short-term borrowings
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
1,941
|
|
Current maturities of long-term debt
|
|
604
|
|
|
1,008
|
|
|
597
|
|
|||
Current operating lease liabilities
|
|
506
|
|
|
500
|
|
|
501
|
|
|||
Accounts payable
|
|
10,841
|
|
|
11,485
|
|
|
7,659
|
|
|||
Accrued compensation and employee benefits
|
|
982
|
|
|
769
|
|
|
684
|
|
|||
Deferred revenue
|
|
1,212
|
|
|
1,376
|
|
|
1,219
|
|
|||
Other current liabilities
|
|
3,180
|
|
|
2,643
|
|
|
2,581
|
|
|||
Total current liabilities
|
|
18,325
|
|
|
17,781
|
|
|
15,182
|
|
|||
Long-term debt, excluding current maturities
|
|
20,200
|
|
|
16,542
|
|
|
16,768
|
|
|||
Noncurrent operating lease liabilities
|
|
3,915
|
|
|
4,064
|
|
|
3,943
|
|
|||
Deferred revenue – extended protection plans
|
|
915
|
|
|
837
|
|
|
894
|
|
|||
Other liabilities
|
|
761
|
|
|
759
|
|
|
712
|
|
|||
Total liabilities
|
|
44,116
|
|
|
39,983
|
|
|
37,499
|
|
|||
|
|
|
|
|
|
|
||||||
Shareholders' equity:
|
|
|
|
|
|
|
||||||
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 – 755 million, 795 million, and 763 million shares, respectively
|
|
377
|
|
|
397
|
|
|
381
|
|
|||
Capital in excess of par value
|
|
10
|
|
|
—
|
|
|
—
|
|
|||
Retained earnings
|
|
1,722
|
|
|
3,095
|
|
|
1,727
|
|
|||
Accumulated other comprehensive loss
|
|
(393
|
)
|
|
(256
|
)
|
|
(136
|
)
|
|||
Total shareholders' equity
|
|
1,716
|
|
|
3,236
|
|
|
1,972
|
|
|||
Total liabilities and shareholders' equity
|
|
$
|
45,832
|
|
|
$
|
43,219
|
|
|
$
|
39,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||||||
|
|
May 1, 2020
|
|
May 3, 2019
|
||||||||
Current Earnings
|
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
||||
Net sales
|
|
$
|
19,675
|
|
|
100.00
|
|
$
|
17,741
|
|
|
100.00
|
Cost of sales
|
|
13,162
|
|
|
66.90
|
|
12,160
|
|
|
68.54
|
||
Gross margin
|
|
6,513
|
|
|
33.10
|
|
5,581
|
|
|
31.46
|
||
Expenses:
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
|
4,196
|
|
|
21.32
|
|
3,862
|
|
|
21.77
|
||
Depreciation and amortization
|
|
326
|
|
|
1.66
|
|
302
|
|
|
1.70
|
||
Operating income
|
|
1,991
|
|
|
10.12
|
|
1,417
|
|
|
7.99
|
||
Interest – net
|
|
205
|
|
|
1.04
|
|
162
|
|
|
0.92
|
||
Pre-tax earnings
|
|
1,786
|
|
|
9.08
|
|
1,255
|
|
|
7.07
|
||
Income tax provision
|
|
449
|
|
|
2.28
|
|
209
|
|
|
1.17
|
||
Net earnings
|
|
$
|
1,337
|
|
|
6.80
|
|
$
|
1,046
|
|
|
5.90
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding – basic
|
|
755
|
|
|
|
|
796
|
|
|
|
||
Basic earnings per common share
|
|
$
|
1.76
|
|
|
|
|
$
|
1.31
|
|
|
|
Weighted average common shares outstanding – diluted
|
|
756
|
|
|
|
|
797
|
|
|
|
||
Diluted earnings per common share
|
|
$
|
1.76
|
|
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||||||||
|
May 1, 2020
|
|
May 3, 2019
|
||||||||||
|
Amount
|
|
% Sales
|
|
Amount
|
|
% Sales
|
||||||
Net earnings
|
$
|
1,337
|
|
|
6.80
|
|
|
$
|
1,046
|
|
|
5.90
|
|
Foreign currency translation adjustments – net of tax
|
(159
|
)
|
|
(0.82
|
)
|
|
(33
|
)
|
|
(0.18
|
)
|
||
Cash flow hedges – net of tax
|
(102
|
)
|
|
(0.52
|
)
|
|
(15
|
)
|
|
(0.09
|
)
|
||
Other
|
4
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
||
Other comprehensive loss
|
(257
|
)
|
|
(1.31
|
)
|
|
(48
|
)
|
|
(0.27
|
)
|
||
Comprehensive income
|
$
|
1,080
|
|
|
5.49
|
|
|
$
|
998
|
|
|
5.63
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Capital in Excess
of Par Value |
|
Retained Earnings
|
|
Accumulated Other Comprehensive
Loss |
|
Total Shareholders’ Equity
|
|||||||||||||
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|||||||||||||
Balance January 31, 2020
|
763
|
|
|
$
|
381
|
|
|
$
|
—
|
|
|
$
|
1,727
|
|
|
$
|
(136
|
)
|
|
$
|
1,972
|
|
Net earnings
|
|
|
|
|
|
|
1,337
|
|
|
|
|
1,337
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(257
|
)
|
|
(257
|
)
|
|||||||||
Cash dividends declared, $0.55 per share
|
|
|
|
|
|
|
(415
|
)
|
|
|
|
(415
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
23
|
|
|
|
|
|
|
23
|
|
|||||||||
Repurchase of common stock
|
(10
|
)
|
|
(5
|
)
|
|
(15
|
)
|
|
(927
|
)
|
|
|
|
(947
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
2
|
|
|
1
|
|
|
2
|
|
|
|
|
|
|
3
|
|
|||||||
Balance May 1, 2020
|
755
|
|
|
$
|
377
|
|
|
$
|
10
|
|
|
$
|
1,722
|
|
|
$
|
(393
|
)
|
|
$
|
1,716
|
|
Balance February 1, 2019
|
801
|
|
|
$
|
401
|
|
|
$
|
—
|
|
|
$
|
3,452
|
|
|
$
|
(209
|
)
|
|
$
|
3,644
|
|
Cumulative effect of accounting change
|
|
|
|
|
|
|
(263
|
)
|
|
|
|
(263
|
)
|
|||||||||
Net earnings
|
|
|
|
|
|
|
1,046
|
|
|
|
|
1,046
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(47
|
)
|
|
(47
|
)
|
|||||||||
Cash dividends declared, $0.48 per share
|
|
|
|
|
|
|
(382
|
)
|
|
|
|
(382
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
39
|
|
|
|
|
|
|
39
|
|
|||||||||
Repurchase of common stock
|
(8
|
)
|
|
(5
|
)
|
|
(70
|
)
|
|
(758
|
)
|
|
|
|
(833
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
2
|
|
|
1
|
|
|
31
|
|
|
|
|
|
|
32
|
|
|||||||
Balance May 3, 2019
|
795
|
|
|
$
|
397
|
|
|
$
|
—
|
|
|
$
|
3,095
|
|
|
$
|
(256
|
)
|
|
$
|
3,236
|
|
|
Three Months Ended
|
||||||
|
May 1, 2020
|
|
May 3, 2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net earnings
|
$
|
1,337
|
|
|
$
|
1,046
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
373
|
|
|
337
|
|
||
Noncash lease expense
|
116
|
|
|
114
|
|
||
Deferred income taxes
|
46
|
|
|
(106
|
)
|
||
Loss (gain) on property and other assets – net
|
17
|
|
|
(2
|
)
|
||
Share-based payment expense
|
27
|
|
|
42
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Merchandise inventory – net
|
(1,183
|
)
|
|
(2,478
|
)
|
||
Other operating assets
|
(206
|
)
|
|
(275
|
)
|
||
Accounts payable
|
3,207
|
|
|
3,199
|
|
||
Other operating liabilities
|
716
|
|
|
260
|
|
||
Net cash provided by operating activities
|
4,450
|
|
|
2,137
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of investments
|
(70
|
)
|
|
(3
|
)
|
||
Proceeds from sale/maturity of investments
|
107
|
|
|
54
|
|
||
Capital expenditures
|
(328
|
)
|
|
(205
|
)
|
||
Proceeds from sale of property and other long-term assets
|
25
|
|
|
24
|
|
||
Other – net
|
(22
|
)
|
|
(1
|
)
|
||
Net cash used in investing activities
|
(288
|
)
|
|
(131
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Net change in commercial paper
|
(941
|
)
|
|
(722
|
)
|
||
Net proceeds from issuance of debt
|
3,961
|
|
|
2,972
|
|
||
Repayment of debt
|
(543
|
)
|
|
(616
|
)
|
||
Proceeds from issuance of common stock under share-based payment plans
|
4
|
|
|
32
|
|
||
Cash dividend payments
|
(420
|
)
|
|
(385
|
)
|
||
Repurchase of common stock
|
(966
|
)
|
|
(826
|
)
|
||
Other – net
|
(3
|
)
|
|
(9
|
)
|
||
Net cash provided by financing activities
|
1,092
|
|
|
446
|
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash
|
(15
|
)
|
|
(2
|
)
|
||
|
|
|
|
||||
Net increase in cash and cash equivalents, including cash classified within current assets
held for sale
|
5,239
|
|
|
2,450
|
|
||
Less: Net decrease in cash classified within current assets held for sale
|
—
|
|
|
12
|
|
||
Net increase in cash and cash equivalents
|
5,239
|
|
|
2,462
|
|
||
Cash and cash equivalents, beginning of period
|
716
|
|
|
511
|
|
||
Cash and cash equivalents, end of period
|
$
|
5,955
|
|
|
$
|
2,973
|
|
|
|
|
|
(In millions)
|
Three Months Ended
|
||||||
May 1, 2020
|
|
May 3, 2019
|
|||||
Products
|
$
|
19,020
|
|
|
$
|
16,900
|
|
Services
|
399
|
|
|
554
|
|
||
Other
|
256
|
|
|
287
|
|
||
Net sales
|
$
|
19,675
|
|
|
$
|
17,741
|
|
|
Three Months Ended
|
||||||||||
|
May 1, 2020
|
|
May 3, 2019
|
||||||||
(In millions)
|
Net Sales
|
|
%
|
|
Net Sales
|
|
%
|
||||
Home Décor ¹
|
$
|
6,930
|
|
|
35
|
|
$
|
6,336
|
|
|
36
|
Hardlines ²
|
6,433
|
|
|
33
|
|
5,555
|
|
|
31
|
||
Building Products ³
|
5,965
|
|
|
30
|
|
5,397
|
|
|
30
|
||
Other
|
347
|
|
|
2
|
|
453
|
|
|
3
|
||
Total
|
$
|
19,675
|
|
|
100
|
|
$
|
17,741
|
|
|
100
|
1
|
Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint
|
2
|
Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools
|
3
|
Building Products includes the following product categories: Building Materials, Electrical, Lighting, Lumber, Millwork, and Rough Plumbing
|
(In millions)
|
Three Months Ended
|
||||||
May 1, 2020
|
|
May 3, 2019
|
|||||
United States
|
$
|
18,760
|
|
|
$
|
16,647
|
|
International
|
915
|
|
|
1,094
|
|
||
Net Sales
|
$
|
19,675
|
|
|
$
|
17,741
|
|
•
|
Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
|
•
|
Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities
|
|
|
|
Fair Value Measurements at
|
||||||||||
(In millions)
|
Measurement Level
|
|
May 1, 2020
|
|
May 3, 2019
|
|
January 31, 2020
|
||||||
Assets:
|
|
|
|
|
|
|
|
||||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
||||||
U.S. Treasury securities
|
Level 1
|
|
$
|
133
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Money market funds
|
Level 1
|
|
33
|
|
|
156
|
|
|
105
|
|
|||
Corporate debt securities
|
Level 2
|
|
28
|
|
|
12
|
|
|
23
|
|
|||
Agency securities
|
Level 2
|
|
7
|
|
|
22
|
|
|
19
|
|
|||
Total short-term investments
|
|
|
$
|
201
|
|
|
$
|
190
|
|
|
$
|
160
|
|
Long-term investments:
|
|
|
|
|
|
|
|
||||||
Available-for-sale debt securities
|
|
|
|
|
|
|
|
||||||
U.S. Treasury securities
|
Level 1
|
|
$
|
214
|
|
|
$
|
26
|
|
|
$
|
280
|
|
Corporate debt securities
|
Level 2
|
|
56
|
|
|
181
|
|
|
62
|
|
|||
Agency securities
|
Level 2
|
|
30
|
|
|
28
|
|
|
30
|
|
|||
Total long-term investments
|
|
|
$
|
300
|
|
|
$
|
235
|
|
|
$
|
372
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||
Other current liabilities:
|
|
|
|
|
|
|
|
||||||
Derivative instruments
|
|
|
|
|
|
|
|
||||||
Forward interest rate swaps
|
Level 2
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Total other current liabilities
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Other liabilities:
|
|
|
|
|
|
|
|
||||||
Derivative instruments
|
|
|
|
|
|
|
|
||||||
Forward interest rate swaps
|
Level 2
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total other liabilities
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
May 1, 2020
|
|
May 3, 2019
|
|
January 31, 2020
|
||||||||||||||||||
(In millions)
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||||||
Unsecured notes (Level 1)
|
$
|
20,106
|
|
|
$
|
23,209
|
|
|
$
|
17,090
|
|
|
$
|
17,261
|
|
|
$
|
16,648
|
|
|
$
|
18,808
|
|
Mortgage notes (Level 2)
|
5
|
|
|
5
|
|
|
6
|
|
|
6
|
|
|
5
|
|
|
6
|
|
||||||
Long-term debt (excluding finance lease obligations)
|
$
|
20,111
|
|
|
$
|
23,214
|
|
|
$
|
17,096
|
|
|
$
|
17,267
|
|
|
$
|
16,653
|
|
|
$
|
18,814
|
|
Principal Amount
(in millions)
|
|
Maturity Date
|
|
Interest Rate
|
|
Discount (in millions)
|
||||
$
|
750
|
|
|
April 2025
|
|
4.000%
|
|
$
|
4
|
|
$
|
1,250
|
|
|
April 2030
|
|
4.500%
|
|
$
|
12
|
|
$
|
750
|
|
|
April 2040
|
|
5.000%
|
|
$
|
10
|
|
$
|
1,250
|
|
|
April 2050
|
|
5.125%
|
|
$
|
13
|
|
(In millions)
|
Three Months Ended
|
||||||
May 1, 2020
|
|
May 3, 2019
|
|||||
Other comprehensive loss
|
|
|
|
||||
Cash flow hedges - net of tax
|
$
|
(104
|
)
|
|
$
|
(15
|
)
|
Net earnings
|
|
|
|
||||
Interest - net
|
$
|
1
|
|
|
$
|
—
|
|
|
Three Months Ended
|
||||||||||||
|
May 1, 2020
|
|
May 3, 2019
|
||||||||||
(In millions)
|
Shares
|
|
|
Cost 1
|
|
|
Shares
|
|
|
Cost 1
|
|
||
Share repurchase program
|
9.5
|
|
|
$
|
940
|
|
|
8.0
|
|
|
$
|
818
|
|
Shares withheld from employees
|
0.1
|
|
|
7
|
|
|
0.1
|
|
|
13
|
|
||
Total share repurchases
|
9.6
|
|
|
$
|
947
|
|
|
8.1
|
|
|
$
|
831
|
|
1
|
Reductions of $927 million and $758 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended May 1, 2020, and May 3, 2019, respectively.
|
|
Three Months Ended
|
||||||
(In millions, except per share data)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Basic earnings per common share:
|
|
|
|
||||
Net earnings
|
$
|
1,337
|
|
|
$
|
1,046
|
|
Less: Net earnings allocable to participating securities
|
(4
|
)
|
|
(3
|
)
|
||
Net earnings allocable to common shares, basic
|
$
|
1,333
|
|
|
$
|
1,043
|
|
Weighted-average common shares outstanding
|
755
|
|
|
796
|
|
||
Basic earnings per common share
|
$
|
1.76
|
|
|
$
|
1.31
|
|
Diluted earnings per common share:
|
|
|
|
|
|
||
Net earnings
|
$
|
1,337
|
|
|
$
|
1,046
|
|
Less: Net earnings allocable to participating securities
|
(4
|
)
|
|
(3
|
)
|
||
Net earnings allocable to common shares, diluted
|
$
|
1,333
|
|
|
$
|
1,043
|
|
Weighted-average common shares outstanding
|
755
|
|
|
796
|
|
||
Dilutive effect of non-participating share-based awards
|
1
|
|
|
1
|
|
||
Weighted-average common shares, as adjusted
|
756
|
|
|
797
|
|
||
Diluted earnings per common share
|
$
|
1.76
|
|
|
$
|
1.31
|
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Long-term debt
|
$
|
187
|
|
|
$
|
154
|
|
Short-term borrowings
|
10
|
|
|
6
|
|
||
Finance lease obligations
|
8
|
|
|
7
|
|
||
Interest income
|
(5
|
)
|
|
(7
|
)
|
||
Other
|
5
|
|
|
2
|
|
||
Interest – net
|
$
|
205
|
|
|
$
|
162
|
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Cash paid for interest, net of amount capitalized
|
$
|
345
|
|
|
$
|
287
|
|
Cash paid for income taxes – net
|
$
|
9
|
|
|
$
|
19
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Leased assets obtained in exchange for new finance lease liabilities
|
$
|
34
|
|
|
$
|
3
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
$
|
153
|
|
|
$
|
145
|
|
Cash dividends declared but not paid
|
$
|
416
|
|
|
$
|
382
|
|
•
|
•
|
•
|
•
|
•
|
•
|
1.
|
Creating a safe store environment for our associates and customers,
|
2.
|
Providing support for our community, including health care providers and first responders, and
|
3.
|
Financially supporting our associates during this unprecedented time.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period
|
|
|
Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
|
|
||||
|
May 1, 2020
|
|
May 3, 2019
|
|
2020 vs. 2019
|
|
|
2020 vs. 2019
|
|
||
Net sales
|
100.00
|
%
|
|
100.00
|
%
|
|
N/A
|
|
|
10.9
|
%
|
Gross margin
|
33.10
|
|
|
31.46
|
|
|
164
|
|
|
16.7
|
|
Expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
21.32
|
|
|
21.77
|
|
|
(45
|
)
|
|
8.6
|
|
Depreciation and amortization
|
1.66
|
|
|
1.70
|
|
|
(4
|
)
|
|
7.9
|
|
Operating income
|
10.12
|
|
|
7.99
|
|
|
213
|
|
|
40.5
|
|
Interest – net
|
1.04
|
|
|
0.92
|
|
|
12
|
|
|
26.2
|
|
Pre-tax earnings
|
9.08
|
|
|
7.07
|
|
|
201
|
|
|
42.4
|
|
Income tax provision
|
2.28
|
|
|
1.17
|
|
|
111
|
|
|
115.5
|
|
Net earnings
|
6.80
|
%
|
|
5.90
|
%
|
|
90
|
|
|
27.8
|
%
|
|
Three Months Ended
|
||||||
Other Metrics
|
May 1, 2020
|
|
May 3, 2019
|
||||
Comparable sales increase 1
|
11.2
|
%
|
|
3.2
|
%
|
||
Total customer transactions (in millions)
|
233
|
|
|
230
|
|
||
Average ticket 2
|
$
|
84.38
|
|
|
$
|
77.19
|
|
At end of period:
|
|
|
|
||||
Number of stores
|
1,970
|
|
|
2,002
|
|
||
Sales floor square feet (in millions)
|
208
|
|
|
209
|
|
||
Average store size selling square feet (in thousands) 3
|
106
|
|
|
104
|
|
||
Net earnings to average debt and equity 4
|
17.2
|
%
|
|
9.2
|
%
|
||
Return on invested capital 4
|
19.7
|
%
|
|
11.5
|
%
|
1
|
A comparable location is defined as a location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. The relocated location must then remain open longer than 13 months to be considered comparable. A location we have decided to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Comparable sales include online sales, which positively impacted first quarter fiscal 2020 and first quarter fiscal 2019 comparable sales by approximately 430 basis points and 70 basis points, respectively. The comparable store sales calculation included in the preceding table was calculated using comparable 13-week periods.
|
2
|
Average ticket is defined as net sales divided by the total number of customer transactions.
|
3
|
Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s-branded home improvement store has approximately 112 thousand square feet of retail selling space.
|
4
|
Return on invested capital is calculated using a non-GAAP financial measure. Net earnings to average debt and equity is the most comparable GAAP ratio. See below for additional information and reconciliations of non-GAAP measures.
|
•
|
Beginning in the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations, and in the fourth quarter of fiscal 2019, the Company announced additional actions to improve future performance and profitability of its Canadian operations. As a result of this review and related actions, during the three months ended May 1, 2020, the Company recognized $9 million of pre-tax operating costs related to exit costs (Canada restructuring).
|
•
|
Prior to the beginning of fiscal 2019, the Company announced its intention to exit its Mexico retail operations and had planned to sell the operating business. However, in the first quarter of 2019, after an extensive market evaluation, the decision was made to instead sell the assets of the business through liquidation. That decision resulted in an $82 million tax benefit in the first quarter, partially offset by $12 million in pre-tax operating losses associated with the exit and ongoing wind-down of the Mexico retail operations (Mexico adjustments).
|
|
Three Months Ended
|
||||||||||||||||||
|
May 1, 2020
|
|
May 3, 2019
|
||||||||||||||||
|
Pre-Tax Earnings
|
|
Tax
|
|
Net Earnings
|
|
Pre-Tax Earnings
|
|
Tax
|
|
Net Earnings
|
||||||||
Diluted earnings per share, as reported
|
|
|
|
|
$
|
1.76
|
|
|
|
|
|
|
$
|
1.31
|
|
||||
Non-GAAP adjustments – per share impacts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Canada restructuring
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Mexico adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
(0.10
|
)
|
|
(0.09
|
)
|
||
Adjusted diluted earnings per share
|
|
|
|
|
$
|
1.77
|
|
|
|
|
|
|
$
|
1.22
|
|
|
For the Periods Ended
|
||||||
(In millions, except percentage data)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Calculation of Return on Invested Capital
|
|
|
|
||||
Numerator
|
|
|
|
||||
Net Earnings
|
$
|
4,572
|
|
|
$
|
2,372
|
|
Plus:
|
|
|
|
||||
Interest expense – net
|
733
|
|
|
626
|
|
||
Operating lease interest
|
189
|
|
|
201
|
|
||
Provision for income taxes
|
1,583
|
|
|
972
|
|
||
Lease adjusted net operating profit
|
7,077
|
|
|
4,171
|
|
||
Less:
|
|
|
|
||||
Income tax adjustment 1
|
1,820
|
|
|
1,212
|
|
||
Lease adjusted net operating profit after tax
|
$
|
5,257
|
|
|
$
|
2,959
|
|
|
|
|
|
||||
Denominator
|
|
|
|
||||
Average debt and equity 2
|
$
|
26,645
|
|
|
$
|
25,676
|
|
Net earnings to average debt and equity
|
17.2
|
%
|
|
9.2
|
%
|
||
Return on invested capital
|
19.7
|
%
|
|
11.5
|
%
|
1
|
Income tax adjustment is defined as net operating profit multiplied by the effective tax rate, which was 25.7% and 29.1% for the periods ended May 1, 2020, and May 3, 2019, respectively.
|
2
|
Average debt and equity is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total equity.
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Net cash provided by operating activities
|
$
|
4,450
|
|
|
$
|
2,137
|
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Net cash used in investing activities
|
$
|
(288
|
)
|
|
$
|
(131
|
)
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Existing store investments 1
|
$
|
266
|
|
|
$
|
147
|
|
Strategic initiatives 2
|
40
|
|
|
17
|
|
||
New stores, new corporate facilities and international 3
|
22
|
|
|
41
|
|
||
Total capital expenditures
|
$
|
328
|
|
|
$
|
205
|
|
1
|
Includes merchandising resets, facility repairs, replacements of IT and store equipment, among other specific efforts.
|
2
|
Represents investments related to our strategic focus areas aimed at improving customers’ experience and driving improved performance in the near and long term.
|
3
|
Represents expenditures primarily related to land purchases, buildings, and personal property for new store projects and new corporate facilities projects, as well as expenditures related to our international operations.
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Net cash provided by financing activities
|
$
|
1,092
|
|
|
$
|
446
|
|
|
Three Months Ended
|
||||||
(In millions, except for interest rate data)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Net change in commercial paper
|
$
|
(941
|
)
|
|
$
|
(722
|
)
|
Maximum commercial paper outstanding at any month-end
|
$
|
1,858
|
|
|
$
|
1,189
|
|
Short-term borrowings outstanding at quarter-end
|
$
|
1,000
|
|
|
$
|
—
|
|
Weighted-average interest rate of short-term borrowings outstanding
|
1.86
|
%
|
|
—
|
%
|
|
Three Months Ended
|
||||||
(In millions)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Net proceeds from issuance of debt
|
$
|
3,961
|
|
|
$
|
2,972
|
|
Repayment of debt
|
$
|
(543
|
)
|
|
$
|
(616
|
)
|
|
Three Months Ended
|
||||||
(In millions, except per share data)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Total amount paid for share repurchases
|
$
|
966
|
|
|
$
|
826
|
|
Total number of shares repurchased
|
9.8
|
|
|
8.1
|
|
||
Average price paid per share
|
$
|
98.78
|
|
|
$
|
102.35
|
|
|
Three Months Ended
|
||||||
(In millions, except per share data)
|
May 1, 2020
|
|
May 3, 2019
|
||||
Total cash dividend payments
|
$
|
420
|
|
|
$
|
385
|
|
Dividends paid per share
|
$
|
0.55
|
|
|
$
|
0.48
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
|
Less Than
|
|
1-3
|
|
4-5
|
|
After 5
|
||||||||||
(In millions)
|
Total
|
|
1 Year
|
|
Years
|
|
Years
|
|
Years
|
||||||||||
Long-term debt (principal amounts, excluding discounts and debt issuance costs)
|
$
|
20,312
|
|
|
$
|
525
|
|
|
$
|
1,266
|
|
|
$
|
1,702
|
|
|
$
|
16,819
|
|
Long-term debt (interest payments)
|
13,796
|
|
|
853
|
|
|
1,603
|
|
|
1,523
|
|
|
9,817
|
|
|||||
Total
|
$
|
34,108
|
|
|
$
|
1,378
|
|
|
$
|
2,869
|
|
|
$
|
3,225
|
|
|
$
|
26,636
|
|
•
|
the duration and scope of the pandemic and associated disruptions;
|
•
|
the effects of current and future governmental and public responses to changing conditions;
|
•
|
the financial condition and purchasing power of our customers; and
|
•
|
the ability of the third parties on which we rely, including our suppliers and other external business partners, to meet their obligations to the company, or significant disruptions in their ability to do so which may be caused by their own financial or operational difficulties.
|
|
Total Number of Shares Purchased 1
|
|
|
Average Price Paid per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2
|
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2
|
|
||
February 1, 2020 - February 28, 2020 3
|
6,035,344
|
|
|
$
|
99.90
|
|
|
6,033,518
|
|
|
$
|
8,911,781,233
|
|
February 29, 2020 - April 3, 2020
|
2,002,107
|
|
|
100.39
|
|
|
1,917,339
|
|
|
8,717,610,699
|
|
||
April 4, 2020 - May 1, 2020 3
|
1,580,320
|
|
|
90.43
|
|
|
1,580,175
|
|
|
8,717,610,699
|
|
||
As of May 1, 2020
|
9,617,771
|
|
|
$
|
98.45
|
|
|
9,531,032
|
|
|
$
|
8,717,610,699
|
|
1
|
The total number of shares repurchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.
|
2
|
On December 12, 2018, the Company’s Board of Directors authorized an additional $10.0 billion share repurchase program with no expiration, which was announced on the same day.
|
3
|
In February 2020, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution and received an initial delivery of 3.9 million shares. In May, prior to the end of the first quarter, the Company finalized the transaction and received an additional 1.6 million shares. The average price paid per share in settlement of the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note 9 to the consolidated financial statements included herein for additional information regarding share repurchases.
|
Exhibit
Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
10-Q
|
|
001-07898
|
|
3.1
|
|
September 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
8-K
|
|
001-07898
|
|
3.1
|
|
May 4, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
8-K
|
|
001-07898
|
|
4.2
|
|
March 27, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
March 24, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOWE’S COMPANIES, INC.
|
|
|
(Registrant)
|
|
|
|
May 28, 2020
|
|
By: /s/ David M. Denton
|
Date
|
|
David M. Denton
Executive Vice President, Chief Financial Officer
|
|
LOWE’S COMPANIES, INC.
|
|
|
|
By: /s/ Janice Little
|
|
Name: Janice Little
|
|
Title: SVP Talent Mgmt & Diversity
|
|
Date: April 6, 2020
|
|
|
|
JENNIFER L. WEBER
|
|
/s/ Jennifer L. Weber
|
|
Date: April 6, 2020
|
Description
|
Registration
Statement Number
|
|
|
Form S-3 ASR
|
|
Lowe’s Stock Advantage Direct Stock Purchase Plan
|
333-220388
|
Debt Securities, Preferred Stock, Common Stock
|
333-226983
|
|
|
Form S-8
|
|
Lowe’s 401(k) Plan
|
33-29772
|
Lowe’s Companies, Inc. Directors’ Stock Incentive Plan
|
33-54497
|
Lowe’s Companies, Inc. 1994 Incentive Plan
|
33-54499
|
Lowe’s Companies, Inc. 1997 Incentive Plan
|
333-34631
|
Lowe’s Companies, Inc. Directors’ Stock Option Plan
|
333-89471
|
Lowe’s Companies Benefit Restoration Plan
|
333-97811
|
Lowe’s Companies Cash Deferral Plan
|
333-114435
|
Lowe’s Companies, Inc. 2006 Long-Term Incentive Plan
|
333-138031; 333-196513
|
Lowe’s Companies Employee Stock Purchase Plan - Stock Options for Everyone
|
333-36096; 333-143266; 333-181950
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
May 28, 2020
|
|
/s/ Marvin R. Ellison
|
Date
|
|
Marvin R. Ellison
President and Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
May 28, 2020
|
|
/s/ David M. Denton
|
Date
|
|
David M. Denton
Executive Vice President, Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|