Lowe’s Companies Inc (NYSE:LOW) stock fell 0.026% (As on March 2, 11:21:11 AM UTC-4, Source: Google Finance) after the company posted mixed results for the fourth quarter of FY 22. In the fourth quarter, the total company comparable sales declined 1.5%, while U.S. comps decreased 0.7%, with with comp average ticket up 4.8%, driven by product inflation and higher Pro sales, partly offset by 75 basis points of lumber deflation. This was offset by a comp transaction decline of 5.5%. Sales in Canada totaled $958 million, a decline of 18% in USD on a comparable basis, partly driven by exchange rate unfavorability due to a stronger dollar and lumber deflation. For the quarter, commodity deflation impacted U.S. comps by 75 basis points. On Lowes.com, sales grew 5% on top of 11.5% growth in the fourth quarter of 2021, partly due to strong appliance sales. This represents a two-year comp of 17% and more than 11% sales penetration. The company has completed the sale of the Canadian retail business to Sycamore Partners this quarter.
LOW in the fourth quarter of FY 22 has reported the adjusted earnings per share of $2.28, beating the analysts’ estimates for the adjusted earnings per share of $2.21. The company had reported the adjusted revenue growth of 5 percent to $22.4 billion in the fourth quarter of FY 22, missing the analysts’ estimates for revenue by $310 million. Gross margin was 32.3% of sales in the fourth quarter, down 60 basis points from last year. Product margin rate improved 15 basis points versus the prior year. Gross margins also benefited from 30 basis points of favorable product mix due to a lower percentage of lumber sales. Higher product margin rate was offset by 40 basis points related to the expansion of the supply chain network, 30 basis points of pressure from shrink, and 35 basis points of pressure from the private label credit portfolio.
Additionally, in 2022, the company generated $6.8 billion in free cash flow driven by outstanding operating results, and the company returned $16.5 billion to our shareholders through both share repurchases and dividends.
For fiscal year 2023, total sales is expected to be in the range of approximately $88 – $90 billion vs $90.66B consensus; Comparable sales expected to be flat to down -2% as compared to prior year; Operating income as a percentage of sales (operating margin) is expected to be in the range of 13.6% to 13.8%; Effective income tax rate of approximately 25%; Diluted earnings per share is expected to be in the range of $13.60 to $14.00 vs $13.84 consensus; Capital expenditures of up to $2 billion.