Lowe’s Companies, Inc. (
LOW)
Q3 2009 Earnings Call Transcript
November 16, 2009 9:00 a.m. ET
Executives
Robert A. Niblock - Chairman and Chief Executive Officer
Larry D. Stone - President and Chief Operating Officer
Robert F. Hull Jr. - Executive Vice President and Chief Financial Officer
Gregory M. Bridgeford - Executive Vice President, Business Development
Analysts
Matthew Fassler - Goldman Sachs
Colin McGranahan - Sanford C. Bernstein & Company
Deborah Weinswig - Citigroup
David Schick - Stifel Nicolaus & Company
Michael Lasser - Barclays Capital
Chris Horvers - J.P. Morgan
David Strasser - Janney Montgomery Scott
Alan Rifkin - Bank of America/Merrill Lynch
Presentation
Operator
Good morning, everyone and welcome to Lowe’s Companies Third Quarter 2009 Earnings Conference Call. This call is being recorded. Statements made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
Management’s expectations and opinions reflected in those statements are subject to risks and the company can give no assurance that they will prove to be correct. Those risks are described in the company’s earnings release and in its filings with the Securities and Exchange Commission.
Also during this call, management will be using certain non-GAAP financial measures. You can find a presentation of the most directly comparable GAAP financial measures and other information about them posted on Lowe’s Investor Relations website under Corporate Information and Investor Documents.
Hosting today’s conference will be Mr. Robert Niblock, Chairman and CEO, Mr. Larry Stone, President and COO and Mr. Bob Hull, Executive Vice President and CFO. I will now turn the program over to Mr. Niblock for opening remarks. Please go ahead, sir.
Robert A. Niblock
Good morning, and thanks for your interest in Lowe’s. Following my remarks, Larry Stone will review our operational performance and then Bob Hull will review our financial results.
Comparable store sales for the quarter were negative 7.5% within our guidance and driven by a 6.7% reduction in average ticket and a fractional decline in customer traffic. While spending remained weak, we were pleased with our improvement in comps versus the second quarter.
Highlighting that progress, we saw sequential improvement in comp sales in 45 of 50 states in the U.S. With some of the biggest improvements coming in areas hardest hit by the housing downturn, Larry will provide additional details on our regional performance.
Also, our Canadian stores continued their strong sales performance and delivered positive comps in the quarter. We saw a reversal of a five quarter trend of outdoor related products outcomping indoor products.
In the third quarter, comps for indoor products exceeded outdoor products by 300 basis points, led by positive comps in appliances, flooring and interior paint but also reflective of the impact last year’s hurricane had on outdoor categories.
In fact, we estimate our Gulf Coast stores negatively impacted comps by approximately 100 basis points in the quarter. In addition, Lowe’s self-cannibalization from store expansion negatively impacted comps by approximately 75 basis points, down from nearly 200 basis points in the third quarter of 2008.
While comps remain negative in total, I continue to be pleased with the market share gains we’re capturing. According to third party estimates, we gained 130 basis points of unit market share in the third-calendar quarter.
The broad-based pressures of the macro environment are still evident in our sales and our quarterly consumer survey indicates homeowners continue to delay large purchases and the initiation of large projects until they feel better about the economic climate.
