New York, NY, December 10--Standard & Poor's Ratings Services today raised its long-term ratings on Lowe's Cos. Inc. (LOW) to 'A+' from 'A'. The outlook is stable. The 'A-1' short-term ratings on the company were affirmed.
"The upgrade reflects Lowe's good historical operations and cash flow generation track record, as well as improved credit measures," said Standard & Poor's credit analyst Stella Kapur. "The ratings are based on the company's favorable market position in the home improvement retail sector, its strong operating performance, and our belief that the company's growth plans will continue to be financed conservatively."
Lowe's market share and profitability have improved since it embarked on an aggressive store opening, remodeling, and relocation program in the early 1990s. During this expansion period, the company demonstrated an ability to compete effectively with the industry leader, Home Depot Inc. Currently, more than 70% of Lowe's total stores compete directly with Home Depot, up from about 13% in 1994.
As of Oct. 29, 2004, Lowe's had more than 1,031 stores in 45 states. Same-store sales increased 6.6% in the first three quarters of 2004, following 6.7% and 5.6% advances in 2003 and 2002, respectively.
As a result, revenues for the same period grew 17%, to almost $28 billion. The third quarter of 2004 benefited from increased sales following a very active hurricane season in the Southeastern part of the U.S. Lease-adjusted operating margins were 13.3% for the trailing 12 months ended Oct. 29, 2004.
