Lowe’s Reports First Quarter 2020 Sales And Earnings Results

Lowe’s Companies, Inc. (NYSE: LOW) today reported net earnings of $1.3 billion and diluted earnings per share (EPS) of $1.76 for the quarter ended May 1, 2020, compared to a net earnings of $1.0 billion and diluted EPS of $1.31 in the first quarter of 2019.  First quarter adjusted diluted EPS of $1.77 was 45 percent higher than adjusted diluted EPS of $1.22 in the first quarter of 2019¹.

Sales for the first quarter were $19.7 billion compared to $17.7 billion in the first quarter of 2019, and comparable sales increased 11.2 percent.  Comparable sales for the U.S. home improvement business increased 12.3 percent for the first quarter.

“In late February, we shifted our priorities in response to the COVID-19 pandemic, and immediately focused on how best to serve the needs of our communities during this unprecedented time. Our highest priority remains the health and safety of our associates and community, and we have demonstrated that commitment in the first quarter through an investment of $340 million, including support for healthcare workers and first responders,” commented Marvin R. Ellison, Lowe’s president and CEO.  

“We also enhanced the safety of our operations by shortening our store operating hours in early March, so we could increase cleaning protocols and restock shelves.  And during the hours that our stores were open, we implemented significant operational changes to best facilitate social distancing,” added Mr. Ellison.

“I am tremendously proud of our associates and how they rose to meet the challenges of this global health crisis, and have continued to serve their communities, providing our customers with the essential products and services they need to keep their homes safe and functional, and their businesses running.”

“Our strong first quarter performance, which continues into May, also reflects the benefits of our retail fundamentals strategy, the improvement in our execution, and the resiliency of our home improvement business model.  I am also pleased with our ability to pivot to serve increased online demand with Lowes.com sales increasing 80% in the quarter,” concluded Ellison.  “To assist other retailers in operating safely in this exceptionally challenging environment, we shared our best practices with the Retail Industry Leaders Association and any other retailer who is interested.”

¹ Adjusted diluted earnings per share is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures Reconciliation” section of this release for additional information as well as reconciliations between the Company’s GAAP and non-GAAP financial results.

COVID-19 Response to Date

Support for Associates

• Made two special payments of $300 for full-time hourly associates and $150 for part-time hourly associates to help with unexpected expenses, totaling approximately $145 million
• Increased pay by $2 per hour for the month of April for front-line associates
• Recognized $87 million in ‘Winning Together’ profit-sharing bonuses to front-line associates, which includes an incremental $24 million payment based on above-target store performance
• Offered 14 days of emergency paid leave for all associates who needed it
• Offered up to four weeks of emergency paid leave for those at higher risk for severe illness from COVID-19
• Closed all stores on Easter Sunday, to provide associates time off to recharge with their families
• Offered telemedicine benefits to all associates and their families, even if they are not enrolled in Lowe’s medical plans
• Provided two extra weeks of paid vacation to salaried front-line managers
• Made incremental donation to Lowe’s Employee Relief Fund
• Provided face masks and gloves to all associates
• Stocked in-store food pantries so associates have easier access to food during work and to take home
• Launched Command Center as a single point-of-contact for store operations
• Implemented remote working for store support center associates

Support for Customers

• Optimized store hours by closing 3 hours early every day to increase third-party cleaning routines and restock shelves, while also providing enough operating hours during the day to minimize concentrations of customer traffic
• Increased third-party cleaning services and enhanced cleaning during operating hours throughout the day
• Provided hand sanitizing stations in areas throughout the store, including entrances and exits
• Added social distancing ambassadors to manage customer traffic flow and monitor store traffic to limit customers based on store footprint, in line with regulatory requirements
• Encouraged social distancing through new signage, including floor markers, directional traffic arrows and overhead announcements
• Installed plexiglass shields at all point-of-sale registers
• Made substantial updates to store floor layouts to further support social distancing, such as opening up aisle space by removing displays and shelving and setting up one-way traffic flows in higher-traffic areas
• Launched curbside pickup, so customers can be served without coming inside the store
• Changed delivery procedures to safeguard customer and associate health, including by leaving items outside. Provided delivery drivers with face masks and gloves, as well as additional training.

Support for Communities

• Hired more than 100,000 front-line associates for spring season
• Committed $50 million in charitable contributions, to support our communities in their pandemic response, which includes a $10 million donation in essential protective products for medical workers
• Donated all available respirators to the country’s two largest healthcare distribution organizations
• Empowered all Lowe’s stores to donate products to local hospitals and first responders in their communities to serve short and long-term needs
• Donated $1 million worth of flower baskets for Mother’s Day from its network of small business growers and nurseries and gave them to more than 10,000 mothers in senior living facilities
• Supported communities through longstanding nonprofit partnerships, including Habitat for Humanity, Boys & Girls Clubs, Building Homes for Heroes, USO, American Red Cross, SkillsUSA and Reach Out Worldwide

Capital Allocation
Given the uncertain economic outlook, the Company raised $4 billion in senior unsecured notes, and increased the capacity of its revolving credit facilities by $770 million.  After repaying $500 million of fixed rate notes due April 15, 2020, the Company now has $6.0 billion of cash and cash equivalents as well as $3 billion in undrawn capacity on its revolving credit facilities which will be available for any unanticipated liquidity needs. 

During the quarter, the Company also decided to suspend share repurchases, and does not expect to repurchase any more shares this year beyond what was executed in the first quarter.  The Company repurchased 9.6 million shares for $947 million under its share repurchase program, and paid $420 million in dividends in the first quarter.

As of May 1, 2020, Lowe’s operated 1,970 home improvement and hardware stores in the United States and Canada representing 207.8 million square feet of retail selling space.

A conference call to discuss first quarter 2020 operating results is scheduled for today, Wednesday, May 20, at 9:00 am ET.  The conference call will be available by webcast and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s First Quarter 2020 Earnings Conference Call Webcast.  Supplemental slides will be available approximately 15 minutes prior to the start of the conference call.  A replay of the call will be archived on Lowes.com/investor.