Lowe’s 4Q Net Off 11.5%, Beat Estimates
Earnings per share declined 7 percent to $0.40 from $0.43 in the fourth quarter of 2005.
For fiscal 2006, net earnings grew 12.3 percent to $3.1 billion versus fiscal 2005, a 53-week year. Diluted earnings per share increased 15.0 percent to $1.99 in fiscal 2006.
Fourth quarter sales declined 3.7 percent to $10.4 billion for the 13-week period ended February 2, 2007 versus the 14-week period ended February 3, 2006.
Analysts surveyed by Thomson Financial had been looking for net income of$0.37 a share on revenue of $10.36 billion.
Fiscal 2006 sales increased to $46.9 billion, an 8.5 percent increase for the 52-week period ended February 2, 2007 versus the 53-week period ended February 3, 2006. Adjusting for the comparison to last year's 14-week fourth quarter and 53-week fiscal year as well as the corresponding calendar shift, total sales increased approximately five percent to last year in the fourth quarter and increased approximately ten percent for the fiscal year.
Same store sales, which were not affected by the calendar shift, declined 5.3 percent during the quarter and were flat for the year.
"Our continued focus on executing the fundamentals and providing customer- valued solutions drove solid results in a challenging operating environment," commented Robert A. Niblock, Lowe's chairman and CEO. "Sales continued to be pressured by a slowing housing market, tough comparisons to last year's hurricane recovery and rebuilding efforts and significant deflation in lumber and plywood prices.
"The hard work and dedication displayed by the entire Lowe's team helped us meet the many challenges faced during the year and sharpened our commitment to customer service. We achieved clear market share gains in many categories and a 12.3 percent increase in net earnings, while positioning the business for long-term growth.
"We are encouraged by indications that our sales trends have bottomed. As a result, we believe our comparable store sales performance will gradually improve throughout 2007."
During the quarter, Lowe's opened 58 new stores including 3 relocations. As of February 2, 2007, Lowe's operated 1,385 stores in 49 states representing 157.1 million square feet of retail selling space, a 12.1 percent increase over last year.
Lowe's Business Outlook
First Quarter 2007 (comparisons to first quarter 2006)
* The company expects to open 15 new stores reflecting square footage growth of approximately 11 percent
* Total sales are expected to increase 5 to 6 percent
* The company expects to report a omparable store sales decline of 2 to 4 percent
* Operating margin (defined as gross margin less SG&A and depreciation)is expected to decline approximately 150 basis points
* Store opening costs are expected to be approximately $14 million
* Diluted earnings per share of $0.49 to $0.51 are expected
* Lowe's first quarter ends on May 4, 2007 with operating results to be publicly released on Monday, May 21, 2007
Fiscal Year 2007 (comparisons to fiscal year 2006)
* The company expects to open 150 to 160 stores in 2007 reflecting total square footage growth of approximately 11 percent
* Total sales are expected to increase approximately 10 percent
* The company expects comparable store sales to be approximately flat to up 2 percent
* Operating margin (defined as gross margin less SG&A and depreciation)is expected to decline 70 to 80 basis points
* Store opening costs are expected to be $140 to $145 million
* Diluted earnings per share of $2.02 to $2.09 are expected for the fiscal year ending February 1, 2008