Lowe’s Companies, Inc.
CEO : Mr. Marvin R. Ellison
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q4 | 5.2% YoY | -7.8% | -11.7% | 2023-03-01 |
Marvin Ellison says,
Q4 2022 Earnings Highlights
- Total company comparable sales declined by 1.5% and US comps decreased 0.7% due to commodity deflation.
- Pro sales in the US grew by 10%, marking the 11th consecutive quarter of double-digit growth.
- Adjusted operating margin expanded approximately 88 basis points, leading to adjusted diluted EPS of $2.28, a 28% increase compared to last year.
- The company awarded $220 million in discretionary and profit-sharing bonuses to associates and invested over $3 billion in incremental wages and share-based compensation for frontline associates since 2018.
- Total Home strategy continued to gain traction with US growth of 36% on a two-year basis.
Online Sales and Delivery Model
- Sales on Lowes.com grew by 5% on top of 11.5% growth in Q4 2021, partly due to strong appliance sales, representing a two-year comp of 17% and more than 11% sales penetration.
- The company added two new geographic areas, bringing the total to 10, supporting more than 1,000 stores for the market delivery model for big and bulky products.
- Market-based delivery model enables profitable growth and positions the company for other big and bulky product categories like grills, riding lawn mowers, and stock cabinets.
Market Outlook
- Core drivers of the business, disposable personal income, home price appreciation, and the age of housing stock, remain supportive.
- Consumer savings are still roughly $1.5 trillion higher than pre-pandemic, with 85% concentrated in the top 40% of income owners who are more likely to be homeowners.
- Homeowners continue to enjoy record levels of equity in their homes, nearly $330,000 on average.
- The housing stock continues to age with 50% of US homes over 41 years old, the oldest since World War II.
- Strong millennial household formation, baby boomers’ increasing preference to age in place, and more widespread remote work will continue to be tailwinds for the business.
Joe McFarland says,
Associate Bonuses and Benefits
- $220 million in discretionary and profit-sharing bonuses awarded, including $70 million for assistant store managers and supply chain supervisors and $150 million for eligible hourly associates
- Comprehensive benefits, flexible scheduling options, and bonus opportunities offered to associates to become the employer of choice in retail
Pro Customer Focus
- 10% US Pro comps for the quarter, 36% on a two-year basis, despite commodity deflation
- Know the Pro training launched to better serve Pro customers across the entire store, resulting in increased Pro customer satisfaction scores
- MVPs, Pro Rewards, and partnership program utilized to engage Pros, incentivize purchases and build long-term loyalty
Perpetual Productivity Improvement Initiatives
- PPI objective is to simplify associates’ jobs while removing friction for customers, generating productivity and cost savings in the store while improving customer service
- New modern omnichannel systems utilized, including easy-to-use touchscreens for returns, simplifying the return experience for customers and associates
- New tools rollout, including 90,000 additional Zebra smartphones, to ensure all associates walking the sales floor have a device, making things easier for associates and customers
Leadership and Employee Development
- 80% of leadership positions built from within over the last year, with more than 90% of store leaders starting as hourly associates
- Focus on becoming the employer of choice in retail by making substantial wage investments and constantly reviewing each market to remain competitive and maintain a robust hiring pool in all geographic areas of the company
- Added improvements this quarter, including sick leave for part-time associates and revamping store break rooms with higher quality, lower-cost food options
- Guidance and development opportunities provided to associates to foster growth and career progression
Overall Performance and Outlook
- Another solid year of operating results delivered by the unwavering commitment of associates to serving customers
- Best staffing levels in three years as the company enters its busiest time of year in spring
- Continued growth expected with the opening of new stores and a new factory in the US
Q & A sessions,
Frontline Wages
- Invested over $3 billion in incremental wages and share-based compensation for front line associates since 2018
- Increased wage by more than 20% over the past four years
- Investing $350 million this year and nearly $1 billion over the next three years in frontline wages
- Wage strategy is a competitive advantage in small and rural markets where they are the highest paying retailer
IT Infrastructure
- Updating their 30-year-old mainline system which has taken 4.5 years to retire
- Retiring the old system will create technology advancements that simplify the associate’s job and limit friction points for customers, reducing payroll and improving customer service
- PPI initiatives on store, merchandising, and supply chain tied to the retirement of the old system
- New IT infrastructure will enable the company to provide a more personalized shopping experience for customers
Supply Chain and Sourcing
- Advanced sourcing logic will allow the company to better manage inventory and reduce costs, resulting in improved margins
- Advanced sourcing logic will give the company the ability to ship merchandise from different points of stores and distribution centers without having to build new DCs
No bad stock 