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Financial, Retail

Lowe's Reports Fourth Quarter 2021 Sales and Earnings Results, Ups 2022 Outlook

The home improvement retailer delivered very strong financial results in 2021, with sales momentum continuing in February, raising its outlook for the operating results of Full Year 2022.

2/25/2022
MOORESVILLE, N.C. -- Lowe's Companies, Inc. (NYSE: LOW) reported net earnings of $1.2 billion and diluted earnings per share (EPS) of $1.78 for the quarter ended January 28, 2022 compared to net earnings of $978 million and diluted EPS of $1.32 in the fourth quarter of 2020. Excluding charges in the prior-year period related to the strategic review of certain operations, fourth quarter diluted EPS of $1.78 increased 34% from adjusted diluted EPS of $1.33 in the fourth quarter of 20201.

Total sales for the fourth quarter were $21.3 billion compared to $20.3 billion in the fourth quarter of 2020, and comparable sales increased 5.0%. Comparable sales for the U.S. home improvement business increased 5.1% for the fourth quarter. Pro customer sales increased 23%.

In the fourth quarter, the company awarded a discretionary year-end bonus of $265 million to front-line associates in recognition of their hard work during the pandemic in 2021. Also, for the eighth consecutive quarter, 100% of Lowe's stores earned a Winning Together quarterly profit-sharing bonus, resulting in an expected total payout of $94 million to front-line hourly associates. This payment is $24 million above the target level.

"We delivered another year of outstanding performance in 2021, as we gained market share across DIY and Pro through our Total Home strategy. I would like to thank our front-line associates for their tremendous efforts this year," commented Marvin R. Ellison, Lowe's chairman, president and CEO. "In 2021, we increased comparable sales by 6.9% while generating over 170 basis points of operating margin improvement, with our relentless focus on productivity and enhanced pricing strategies. We remain confident in the long-term strength of the home improvement market, and our ability to expand operating margin."

Capital Allocation

The company remains committed to a best-in-class capital allocation strategy focused on driving long-term, sustainable shareholder value. The company repurchased approximately 16 million shares for $4.0 billion in the fourth quarter, and it repurchased 63 million shares for $13.1 billion for the year. Total share repurchases in 2021 were $1.1 billion higher than anticipated, reflecting better-than-expected financial performance and the company's commitment to return excess capital to shareholders.

The company also paid $551 million in dividends in the fourth quarter and $2.0 billion in dividends for the year. In total, the company returned $15.1 billion to shareholders through share repurchases and dividends in 2021.

Lowe's Business Outlook

The company delivered very strong financial results in 2021, with sales momentum continuing in February. While the business environment remains somewhat uncertain, the company is raising its outlook for the operating results of Full Year 2022.

Full Year 2022 Outlook -- a 53-week Year (comparisons to full year 2021 -- a 52-week year)

-- Total sales of $97 billion to $99 billion, including the 53rd week
-- 53rd week expected to increase total sales by approximately $1.0 billion to $1.5 billion
-- Comparable sales expected to range from a decline of 1% to an increase of 1%
-- Gross margin rate up slightly compared to prior year
-- Depreciation and amortization of approximately $1.75 billion
-- Operating income as a percentage of sales (operating margin) of 12.8% to 13.0%
-- Interest expense of $1.0 to $1.1 billion
-- Effective income tax rate of approximately 25%
-- Diluted earnings per share of $13.10 to $13.60
-- Total share repurchases of approximately $12 billion
-- ROIC2 of over 36%
-- Capital expenditures of approximately $2 billion

A conference call to discuss fourth quarter 2021 operating results is scheduled for today, Wednesday, February 23, at 9:00 am ET. The conference call will be available by webcast and can be accessed by visiting Lowe's website at ir.lowes.com and clicking on Lowe's Fourth Quarter 2021 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 at ir.lowes.com.

As of January 28, 2022, Lowe's operated 1,971 home improvement and hardware stores in the United States and Canada representing 208 million square feet of retail selling space, and it serviced approximately 230 dealer-owned stores.
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