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Lowe’s Outlines Areas of Strategic Focus at 2018 Conference

Lowe's storefront - carpark 725 x 500.jpg

Lowe’s Companies, Inc. (NYSE: LOW) is meeting today (12th December) with analysts and investors in Mooresville, North Carolina to discuss its strategic priorities and near- and long-term financial targets.

“We have substantially completed a detailed reassessment of our business and are diligently implementing process and technology improvements that are rooted in the fundamentals of retail and designed to position Lowe’s to win in today’s complex retail environment,” commented Marvin R. Ellison, Lowe’s president and CEO. 

“These transformational changes will take time but will enable Lowe’s associates to better focus on serving customers and capture significant market opportunities.  As we work to position the company for the future, we will remain true to our mission of delivering the right home improvement products, with the best service and value, across every channel and community we serve.”

Today’s presentations include the company’s strategies to engage customers, drive merchandising excellence and deliver a seamless, omni-channel experience while maximizing operational efficiency.

“We anticipate that targeted initiatives designed to drive profitable sales, combined with an expense reduction culture, will allow us to generate significant cash flow from operations over the next three years,” commented David M. Denton, Lowe’s executive vice president and CFO. “We are committed to investing in the business while also returning excess cash to shareholders, and strongly believe we can deliver substantial value to all stakeholders.”

Underscoring its commitment to return excess cash to shareholders, the Board of Directors has authorized a new $10 billion common stock repurchase program. This new repurchase program has no expiration date and adds to the previous program’s balance, which was $4.5 billion as of Nov. 2, 2018. Repurchases will be subject to market conditions and will be made from time to time either in the open market or through private off-market transactions in accordance with the requirements of the Securities and Exchange Commission. The company’s repurchase program may be suspended, discontinued or resumed at any time.

“While our top priority remains building a sustainable foundation for long-term success, with our strategic reassessment substantially complete, we are committed to delivering on our near-term financial objectives,” Denton added.  “We are pleased with our performance quarter-to-date, and we expect to achieve our Business Outlook.”

Lowe’s reiterates its prior sales and earnings guidance for Fiscal Year 2018, which was provided in its Nov. 20, 2018 earnings release, and issues its sales and earnings guidance for Fiscal Year 2019.

Lowe’s Business Outlook

Fiscal Year 2018 (comparisons to fiscal year 2017)

  • Total sales are expected to increase approximately 4 percent.
  • Comparable sales are expected to increase approximately 2.5 percent.
  • The company expects to add approximately 8 home improvement stores.
  • Operating income as a percentage of sales (operating margin) is expected to decrease 240 to 255 basis points1, including 135 to 150 basis points from charges associated with its strategic reassessment.
  • The effective income tax rate is expected to be approximately 24 percent.
  • Diluted earnings per share of $4.08 to $4.24 are expected for the fiscal year ending Feb. 1, 2019.
  • Adjusted diluted earnings per share2 are expected to be $5.08 to $5.13.

1) Includes 4 basis point net negative impact from the gain on the sale of the company’s interest in its Australian joint venture (2Q 2017) and the one-time bonus paid to eligible hourly U.S. employees (4Q 2017).
2) 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 a reconciliation between the Company’s GAAP and non-GAAP financial results.

Fiscal Year 2019 (comparisons to fiscal year 2018 business outlook)

  • Total sales are expected to increase approximately 2 percent.
  • Comparable sales are expected to increase approximately 3 percent.
  • Operating income as a percentage of sales (operating margin) is expected to increase 235 to 250 basis points3.
  • The effective income tax rate is expected to be approximately 25 percent.
  • Diluted earnings per share of $6.00 to $6.10 are expected for the fiscal year ending Jan. 31, 2020.

3) Includes 135 to 150 basis points positive impact from expected charges associated with the exit of Orchard Supply Hardware (2Q 2018) as well as certain U.S. and Canada store closings (3Q 2018), and the decision to exit the company’s Mexico retail operations and other non-core activities (3Q 2018).

Source : Lowe's 

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18 December 2018

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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

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Martin Elliott. Chief Executive - Home Hardware.
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