10-K: Lowe's Reports Fiscal 2024 Results, Navigates Challenging Home Improvement Market

Sentiment:

Annual Report 24 March 2025 4:33 PM

Lowe's Companies, Inc. reported a decrease in net sales and earnings for fiscal year 2024, impacted by macroeconomic pressures on discretionary spending, but remains focused on its Total Home strategy.

Worse than expectedNet sales, comparable sales, net earnings, and diluted earnings per share all decreased compared to the prior year.

Summary

Lowe's Companies, Inc. reported a 3.1% decrease in net sales for fiscal 2024, totaling $83.7 billion, compared to $86.4 billion in fiscal 2023.
Comparable sales for fiscal 2024 decreased by 2.7%, driven by a 3.0% decrease in comparable customer transactions, partially offset by a 0.3% increase in comparable average ticket.
Net earnings for fiscal 2024 were $7.0 billion, a 10.0% decrease from $7.7 billion in fiscal 2023.
Diluted earnings per share for fiscal 2024 were $12.23, down 7.4% from $13.20 in fiscal 2023.
Fiscal 2024 results included a pre-tax income of $177 million related to the 2022 sale of the Canadian retail business, positively impacting diluted earnings per share by $0.24.
Adjusted diluted earnings per share, excluding the impact of the Canadian retail business transaction, decreased 8.4% to $11.99 in 2024 from $13.09 in 2023.
The company generated $9.6 billion in cash flows from operating activities and invested $1.9 billion in capital expenditures.
Lowe's repurchased $3.9 billion of common stock and paid $2.6 billion in dividends during fiscal 2024.
The company faced headwinds from inflation and higher interest rates, impacting consumer discretionary spending, particularly on big-ticket DIY projects.
Despite challenges, Lowe's saw positive comparable sales in the Pro customer segment and increased Pro penetration.

Sentiment

Score: 4

Explanation: The sentiment is below neutral due to the declines in key financial metrics, despite some positive aspects like Pro customer growth and strong cash flow generation. The macroeconomic headwinds and competitive pressures contribute to a cautious outlook.

Positives

Generated strong cash flow from operations of $9.6 billion.
Returned significant capital to shareholders through $3.9 billion in share repurchases and $2.6 billion in dividends.
Achieved positive Pro customer comparable sales and increased Pro penetration.
Continued investment in omnichannel capabilities and supply chain transformation.
Increased its quarterly dividend payment by 5% to $1.15 per share in the third quarter of fiscal 2024.
Maintains a strong commitment to corporate responsibility, including sustainability and community investment.

Negatives

Net sales decreased by 3.1% compared to fiscal 2023.
Comparable sales decreased by 2.7% compared to fiscal 2023.
Net earnings decreased by 10.0% compared to fiscal 2023.
Diluted earnings per share decreased by 7.4% compared to fiscal 2023.
Faced macroeconomic headwinds, including inflation and higher interest rates, impacting consumer discretionary spending.
Gross margin decreased by seven basis points compared to fiscal 2023.

Risks

Inability to adapt to the rapidly evolving retail environment and changing customer preferences.
Failure to realize the intended benefits of strategic initiatives, particularly those related to omnichannel capabilities.
Intense competition from national and regional home improvement retailers, as well as online and omnichannel competitors.
Challenges in attracting, retaining, and managing qualified associates.
Disruptions in the supply chain and fulfillment network due to various factors, including geopolitical conflicts and trade policy changes.
Cybersecurity incidents and the failure to protect customer, associate, vendor, or Company information.
Dependence on the health and stability of the general economy and the home improvement industry.
Exposure to risks related to climate change, including physical and transition risks.
Changes in federal, state, or local laws and regulations that could increase the cost of doing business.

Future Outlook

Lowe's remains focused on delivering strong operating performance and making long-term investments for growth, including executing its updated Total Home strategy. The company anticipates continued macroeconomic uncertainties but believes the core demand drivers of its business will sustain long-term demand. Guidance for capital expenditures for fiscal 2025 is approximately $2.5 billion.

Industry Context

The home improvement industry is highly fragmented and competitive, with Lowe's facing competition from national and regional chains, hardware stores, online retailers, and other specialty retailers. The industry is influenced by macroeconomic factors such as home price appreciation, housing turnover, and consumer spending. The shift towards omnichannel retail and the increasing importance of digital capabilities are key trends shaping the competitive landscape.

Comparison to Industry Standards

Lowe's is the world's second-largest home improvement retailer.
The home improvement market is highly fragmented.
Key competitors include national and regional home improvement warehouse chains and lumber yards, traditional hardware, plumbing, electrical, and home supply retailers, as well as paint stores, lumber yards, garden centers, maintenance and repair organizations, general merchandise retailers, home goods specialty stores, warehouse clubs, online retailers, other specialty retailers, providers of equipment and tool rental, service providers that install home improvement products, and wholesalers.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Executive Vice President, Chief Legal Officer and Corporate Secretary	NA	Juliette W. Pryor	March 2024	NA
Executive Vice President, Supply Chain	NA	Margrethe R. Vagell	March 2024	NA

Legal Proceedings

The Company is involved in various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business.
The U.S. Attorneys Office for the Central District of California and the U.S. EPAs Region 9 Office have been conducting an investigation with respect to whether the Company and independent contractors complied with applicable recordkeeping requirements and lead-safe practices.
In the third quarter of fiscal 2023, the EPAs Region 5 and other EPA and U.S. Department of Justice representatives informed the Company that they have identified possible deviations from the consent decree.

Related Party Transactions

The Company's President and Chief Executive Officer also serves on the Board of Directors of a vendor that provides transportation and business services to the Company. The Company purchased services from this vendor in the amount of $240 million in 2024, $217 million in 2023, and $228 million in 2022.

Stakeholder Impact

Shareholders: Impacted by financial performance, dividends, and share repurchases.
Employees: Impacted by job security, compensation, benefits, and career opportunities.
Customers: Impacted by product availability, pricing, service quality, and the overall shopping experience.
Suppliers: Impacted by the Company's sourcing practices, vendor relationships, and demand for products.
Creditors: Impacted by the Company's ability to meet its debt obligations.

Next Steps

Continue executing the Total Home strategy.
Drive Pro penetration.
Accelerate online sales.
Expand home services.
Create a loyalty ecosystem.
Increase space productivity.
Continue investing in omnichannel capabilities and supply chain transformation.
Capital expenditures of approximately $2.5 billion for fiscal 2025.

Key Dates

Date	Description
January 31, 2004	Beginning of the Company's fiscal year in which the Cash Deferral Plan was adopted for base salary and management bonuses.
December 31, 2003	Deadline for the initial Deferral Election under the Cash Deferral Plan.
March 2004	Management Bonus to be paid in March 2004, subject to the initial Deferral Election.
February 1, 2008	Effective date for Plan Years beginning on or after, for Deferral Elections under the Cash Deferral Plan.
December 31, 2007	Deadline for Deferral Elections for subsequent Plan Years under the Cash Deferral Plan, and deadline for a one-time opportunity to change the form of payment.
January 1, 2008	Date after which Participants are not permitted to amend their election as to the form of payment under the Cash Deferral Plan.
March 2009	Example month and year for Management Bonus payment, subject to Deferral Election.
January 1, 2015	Effective date for Plan Years beginning on or after, for eligibility requirements under the Benefit Restoration Plan.
Fiscal 2020	Introduction of the Total Home strategy.
December 2022	Establishment of a goal to reach net-zero emissions by 2050.
Fiscal 2023	Announcement of plans to install rooftop solar panels at 174 store and distribution center locations.
Fiscal 2024	Finalization of the roll-out of the market-based delivery model.
February 3, 2023	Completion of the sale of the Canadian retail business.
December 7, 2022	The Company announced that its Board of Directors authorized an additional $15.0 billion of share repurchases.
March 2023	Issuance of $3.0 billion of unsecured notes.
December 2026	Maturity date of the $2.0 billion five-year unsecured revolving third amended and restated credit agreement.
September 2028	Maturity date of the $2.0 billion five-year unsecured revolving amended and restated credit agreement.
January 31, 2025	End of fiscal year 2024.
February 2, 2024	End of fiscal year 2023.
February 3, 2023	End of fiscal year 2022.
March 24, 2025	Date of the report.
March 20, 2025	Date as of which there were 19,786 holders of record of Lowes common stock.
August 2, 2024	Last business day of the Company's most recent second quarter.
July 15, 2024	Execution date of the amendment and restatement of the Lowe's Companies Cash Deferral Plan and Benefit Restoration Plan.
January 1, 2025	Effective date of the amendment and restatement of the Lowe's Companies Cash Deferral Plan and Benefit Restoration Plan.
May 31, 2024	Revision date of the Lowes Companies, Inc. Insider Trading Policy and Trading Window and Pre-clearance Policy.

Keywords

Lowe's, Home Improvement, Retail, Earnings, Sales, Omnichannel, Pro Customer, DIY Customer, Total Home Strategy, Supply Chain, Dividends, Share Repurchase, Fiscal 2024, Financial Results

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