Mooresville, SC, August 21, 2006--Lowe's reported net earnings of $935 million for the quarter ended August 4, 2006, an 11.4 percent increase over the same period a year ago. Diluted earnings per share increased 15.4 percent to $0.60 from $0.52 in the second quarter of 2005.
Analysts had forecast EPS of $0.61 during the quarter.
Sales for the quarter increased 12.2 percent to $13.4 billion, up from $11.9 billion in the second quarter of 2005.
For the six months ended August 4, 2006, net earnings grew 24.6 percent to $1.78 billion while diluted earnings per share increased 27.0 percent to $1.13.
Sales for the six month period increased 15.9 percent to $25.3 billion. Total sales results were impacted by the calendar shift described in the business outlook section of this release. Comparable store sales for the second quarter increased 3.3 percent and increased 4.4 percent in the first half of 2006.
Robert A. Niblock, Lowe's chairman, president and CEO said, "Despite a backdrop of higher energy costs and a tumultuous geo-political environment that has weighed on the consumer, the team remained focused on providing great customer service and compelling merchandise offerings. These efforts ensured Lowe's continued to capture market share with notable gains in Flooring, Appliances, Outdoor Power Equipment and Cabinets and Countertops in the quarter, according to third-party estimates.
"We remain focused on strategies to grow our business, however near-term pressures on the U.S. consumer have led to a more cautious outlook for the balance of the year," Niblock added. "As we enter the second half of 2006, we remain committed to providing the knowledgeable and attentive service customers have come to expect from Lowe's while prudently managing expenses in the current sales environment.
"Expectations for an orderly slowdown in the housing market, moderate income growth and a solid employment picture are stabilizing forces for the consumer," Niblock concluded. "I am confident the longer term drivers of our industry, including the required ongoing maintenance of the 124 million existing homes in the U.S., favorable demographics and solid household formation trends, combined with our customer focused culture, will ensure our continued success."
During the quarter, Lowe's opened 24 new stores including one relocation. As of August 4, 2006, Lowe's operated 1,281 stores in 49 states representing 145.4 million square feet of retail selling space, a 12.4 percent increase over last year.
Fiscal 2006 annual and fourth quarter comparisons will be negatively impacted by a 52 versus 53 week and 13 versus 14 week comparison, respectively. In addition, 2006 quarterly comparisons will be impacted by a shift in comparable weeks to 2005. This week shift positively impacts the first quarter and is offset by negative impacts in the second and fourth quarters. The week shift does not impact comparable store sales results. Our 2006 guidance contemplates these factors.
Third Quarter 2006 (comparisons to third quarter 2005)
- The company expects to open 48 new stores reflecting square footagegrowth of approximately 13 percent
- Total sales are expected to increase approximately 11 percent
- The company expects to report a comparable store sales increase of 0 to 2 percent
- Store opening costs are expected to be approximately $39 million
- Diluted earnings per share of $0.45 to $0.48 are expected
- The company expects to open 155 stores in 2006 reflecting total square footage growth of approximately 12 percent
- Total sales are expected to increase approximately 11 percent for the year (52 weeks versus 53 weeks in 2005)
- The company expects to report a comparable store sales increase of 2 to 3 percent
- Diluted earnings per share of $2.00 to $2.07 are expected for the fiscal year ending February 2, 2007
