Running head: A LOOK AT LOWES COMPANIES INC
A Look at Lowes Companies INC
Jason Williams
Siena Heights University
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Running head: A LOOK AT LOWES COMPANIES INC
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"We will provide customer-valued solutions with the best prices, products and services to
make Lowe are the first choice for home improvement.”
Background on Company
Lowe’s was founded in 1946, in North Wilkesboro North Carolina by H. Carl
Buchan. The idea came about when Mr. Buchan, who at the time was part owner of the
North Wilkesboro Hardware Company, had a vision, of creating and owning a chain of
hardware stores. During this time, Lowe’s was a bit different then it is today, as they sold
everything from overalls, snuff, washtubs, to horse collars; most of these aren’t found in
today’s stores.
Mr. Buchan would later buy out his brother-in-law and partner James Lowe, and
would change the store completely, foreseeing an up-coming building boom. He changed
Lowe’s into a store that now sold appliances, hardware, and hard to find building
materials. During this time, Buchan also decided to eliminate the wholesaler and deal
directly with the manufacturer, resulting in lower prices, and what would eventually
become the company’s slogan, “Everyday Low Prices.”
The company would go public in 1961, and in 1979, it began to be publicly traded
on the New York Stock Exchange (NYSE) under the acronym, “LOW.” In 1982, Lowe’s
set a record year, with its first billion dollar sales year, with a record breaking 25 million
dollar profit. During this time frame, Lowe’s changed its target market and become more
geared towards a new type of customer, the DIY or do-it-yourself homeowner.
Anticipating the needs of contractors, Lowes began to expand its stores during the
1990’s, and it in 1994 modern Lowe’s began, when new store expansion consisted of
only large stores, defined as stores with greater than 85,000 square feet of selling space.
Running head: A LOOK AT LOWES COMPANIES INC
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Expansion continues as Lowe's opens a new store on average every week with our
117,000-square-foot stores in the nation’s larger metro markets and our newer 94,000square-foot stores in the nation’s small to mid-sized markets. Lowe's opened its first
stores in Canada in December 2007 and opened its first stores in Mexico in February
2010.
Today Lowes stores stock over 40,000 different items and have hundreds of
thousands more available by special order. Lowe’s is currently ranked 42nd on Forbes
Fortune 500 list, and was the first winner of the ENERGY STAR® Sustained Excellence
Award in Retail. Although times may be tough, Lowe’s is also generous in its school and
community contributions, donating over $30 million in 2009.
Today, with the current state of the economy, Lowes along with the other
building retail industry stores are struggling; as economist say that, “The majority of the
DIY projects, are done during the first two years of home ownership.” However, with the
current housing market in a downfall, people aren’t buying homes, and the stores are
suffering. Recently, however things have begun to look up for Lowes, and hopefully will
be a sign of great things to come.
(Lowes History/Overview, 2010)
The Management Team
Currently, Lowe’s management team is set up similar to many other companies in the
United States with a CEO, CFO, COO, and other major components, which are as
follows:
 The CEO is Robert A. Niblock, who has been in this position since 2005, and
with the company since 1993. Mr. Niblock also serves as the chairman for the
board of directors.
 The President and COO of Lowe’s, is Larry Stone, who has been in the position
since 2006 and with the company since 1969. ( I believe Mr. Stone recently
stepped down from this position, with plans to retire)
 The Executive Vice President and CFO is Robert F. Hull, JR, who has been in this
position since 2003, and with the company since 1999
Running head: A LOOK AT LOWES COMPANIES INC
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The rest of the board and management team are made up of various Vice Presidents
of their respective divisions, such as logistics, sales, information technology,
customer support, etc.
(Lowes History/Overview, 2010)
Competition
Lowe’s is a company that has both major and minor competitors. Their biggest
competition comes in the form of the industry’s #1 retailer Home Depot. Lowe’s also
faces competition from the #3 largest in the industry in Menards. Lowe’s faces different
kinds of competition as well, as some stores sell similar products, but aren’t quite the
same; stores like Tractor Supply Company. Also, Lowe’s faces competition from the
“mom and pop” hardware stores and the other major “non-industry” retailers like Meijer,
Wal-Mart, K-Mart, Target and other big box stores.
Financial Ratios (Numbers from Google and Yahoo Finance)
Current Ratio
Current Assets/ Current Liabilities
2010-9,732,000/7,355,000=1.32
2009-9,190,000/7,560,000=1.22
2008-8,686,000/7,751,000=1.12
2010-For each dollar in current liabilities Lowe’s has, they have $1.32 in
current assets.
2009- For each dollar in current liabilities Lowe’s has, they have $1.22 in
current assets.
2008- For each dollar in current liabilities Lowe’s has, they have $1.12 in
current assets.
-Home Depot Numbers: 2010-1.34 2009-1.2 2008-1.15
Running head: A LOOK AT LOWES COMPANIES INC
Quick Ratio
(Current Assets-Inventories)/Current Liabilities
2010-(9,732,000-8,249,000)/7,355,000=.20
2009-(9,190,000-8,209,000)/7,560,000=.13
2008-(8,686,000-7,611,000)/7,751,000=.14
2010- For every dollar in current liabilities Lowe’s has, they have $.20 cents in
current assets minus inventories
2009- For every dollar in current liabilities Lowe’s has, they have $.13 cents in
current assets minus inventories
2008- For every dollar in current liabilities Lowe’s has, they have $.14 cents in
current assets minus inventories
-Home Depot Numbers: 2010-.36 2009-.24 2008-.23
Days-Sales-Outstanding
Lowes didn’t present any receivable numbers; therefore this ratio can not be
completed with the given data.
Total Asset Turnover
Sales/Total Assets
2010-47,220,000/33,005,000=1.43
2009-48,230,000/32,625,000=1.48
2008-48,283,000/30,869,000=1.56
2010-For every dollar in total assets, Lowes has $1.43 in total sales
2009-For every dollar in total assets, Lowes has $1.48 in total sales
2008-For every dollar in total assets, Lowes has $1.56 in total sales
-Home Depot Numbers: 2010-1.65 2009-1.73 2008-1.75
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Running head: A LOOK AT LOWES COMPANIES INC
Debt-to-Assets
Total Debt/Total Assets
2010-13,936,000,000/33,005,000=.42
2009-14,570,000,000/32,625,000=.45
2008-14,771,000,000/30,869,000=.48
2010-Lowes finances each dollar of assets with .42 cents in total debt
2009-Lowes finances each dollar of assets with .45 cents in total debt
2008-Lowes finances each dollar of assets with .48 cents in total debt
-Home Depot Numbers: 2010-.53 2009-.57 2008-.60
Times Interest Earned
EBIT/Interest
2010-2,825,000/0=N/A
2009-3,506,000/298,000=11.77
2008-4,750.000/239.000=19.87
2010-Lowes had no interest charges in 2010
2009-Lowes could cover any interest charges that might arise 11.77 times
2008-Lowes could cover any interest charges that might arise 19.87 times
-Home Depot Numbers: 2010-2009-2008Profit Margin
Net Income/Sales
2010-1,783,000/47,220,000=.037 or 3.7%
2009-2,195,000/48,230,000=.045 or 4.5%
2008-2,809,000/48,283,000=.058 or 5.8%
2010- For every one dollar in sales revenue that Lowes has, they have 3.7 cents
in net income
2009- For every one dollar in sales revenue that Lowes has, they have 4.5 cents
in net income
2008- For every one dollar in sales revenue that Lowes has, they have 5.8 cents
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Running head: A LOOK AT LOWES COMPANIES INC
in net income
-Home Depot Numbers: 2010-4% 2009-3% 2008-5.6%
Return On Assets
Net Income/Total Assets
2010-1,783,000/33,005,000=.05 or 5%
2009-2,195,000/32,625,000=.067 or 6.7%
2008-2,809,000/30,869,000=.09 or 9%
2010-For every dollar invested in total assets, Lowes has 5 cents in net Income
2009-For every dollar invested in total assets, Lowes has 6.7 cents in net income
2008-For every dollar invested in total assets, Lowes has 9 cents in net income
-Home Depot Numbers: 2010-6.5% 2009-5.5% 2008-9.9%
Return on Equity
Net Income/Common Equity
2010-1,783,000/19,069,000=.09 or 9%
2009-2,195,000/18,055,000=.12 or 12%
2008-2,809,000/16,098,000=.17 or 17%
2010-For every one dollar in stockholder’s equity Lowes has, they have 9
cents in net income
2009-For every one dollar in stockholder’s equity Lowes has, they have 12
cents in net income
2008-For every one dollar in stockholder’s equity Lowes has, they have 17
cents in net income
-Home Depot Numbers: 2010-13.7% 2009-12.7% 2008-24.8%
Book Value per Share
Common Equity/Shares Outstanding
2010-19,069,000,000/1,459,000,000=13.07
2009-18,055,000,000/1,470,000,000=12.28
2008-16,098,000,000/1,458,000,000=11.04
-Home Depot Numbers: 2010-11.42 2009-10.48 2008-10.48
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Running head: A LOOK AT LOWES COMPANIES INC
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Horizontal Analysis
Horizontal Analysis
Lowe's Companies Inc-Income Statement
For years 2010, 2009, 2008
Total Revenue
Cost Of Revenue
Gross Profit
Operating Expenses
Research Development
Selling General and Admin
Non Recurring
Others
Total Operating Expenses
Operating Income or Loss
Income From Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest and Taxes
Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
Net Income from Continuing Ops
Non-Recurring Events
Discountiued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Preferred Stock and Other Adjustments
Net Income Applicable to Common Shares
Jan 29th,2010 Jan 30th, 2009 Feb 1st, 2008
47,220,000
48,230,000
48,283,000
30,757,000
31,729,000
31,556,000
16,463,000
16,501,000
16,727,000
-
11,688,000
49,000
1,614,000
-
11,074,000
102,000
1,539,000
2,825,000
2,825,000
1,042,000
-
-
105.32%
72.34%
112.66%
100.00%
100.00%
100.00%
3,506,000
4,705,000
60.04%
74.52%
100.00%
18,000
3,506,000
298,000
3,506,000
1,311,000
45,000
4,750,000
239,000
4,511,000
1,702,000
62.62%
61.22%
40.00%
73.81%
124.69%
77.72%
77.03%
100.00%
100.00%
100.00%
100.00%
100.00%
63.47%
78.14%
100.00%
-
59.47%
-
2,195,000
1,783,000
-
2008
100.00%
100.00%
100.00%
111.16%
34.75%
118.16%
1,783,000
-
2009
99.89%
100.55%
98.65%
10,515,000
141,000
1,366,000
2,825,000
2010
97.80%
97.47%
98.42%
2,809,000
-
2,195,000
-
-
-
-
2,809,000
63.47%
78.14%
100.00%
2,809,000
63.47%
78.14%
100.00%
1,783,000
2,195,000
Running head: A LOOK AT LOWES COMPANIES INC
Works Citied
Companies, L. (2010). Lowes: company overview. Retrieved from
http://media.lowes.com/company+overview/
Companies, L. (2010). Lowes: the history. Retrieved from
http://media.lowes.com/history/
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