Lowe's 2011 Annual Report Download - page 3

LETTER TO SHAREHOLDERS
Lowe’s Companies, Inc. 2011 Annual Report
In 2011, we made progress on our journey to transform Lowe’s from a home improvement
retailer to a home improvement company. We remain steadfast in our efforts to make
home improvement simple by working to deliver seamless, supportive and inspiring
experiences wherever and whenever customers engage with Lowe’s. This work is
well underway, and I am encouraged by the progress we made toward delivering better
customer experiences to drive long-term sales growth, increased profitability and
shareholder value. Our strong operating cash flows and balance sheet are allowing
us to make difficult near term changes that we believe will yield stronger returns in
the future.
2011 Performance
For the year, comparable store sales were flat and total sales grew 2.9%. Net earnings
declined by 8.5% to $1.8 billion, while diluted earnings per share increased 0.7% to
$1.43. Keep in mind that fiscal year 2011 included 53 weeks because Lowe’s fiscal year
ends on the Friday nearest the end of January. The 53rd week contributed $766 million
in sales and approximately $0.05 to diluted earnings per share. However, store closings,
discontinued projects and long-lived asset impairments reduced pre-tax earnings by
$523 million and diluted earnings per share by $0.26.
Net earnings contributed to $4.3 billion in operating cash flows which, along with the
issuance of $1.0 billion of long-term debt, were used to acquire $1.8 billion in fixed assets
and return $3.6 billion to shareholders through share repurchases and cash dividends.
Our Transformation
We are working diligently to improve our performance over the long-term through the
transformation we have undertaken from a home improvement retailer to a home
improvement company. This transformation to seamless and simple home improvement
experiences drove us to reevaluate our investment strategy, rationalize our store expan-
sion, improve employee experiences and upgrade our technology infrastructure.
Retail Excellence
We continue to focus on retail excellence, which requires us to provide an engaging store
experience in the most efficient manner possible. We are growing sales and earnings
primarily through improved asset productivity rather than store expansion, so we
evaluated our existing and future store investments, closed underperforming stores,
and scaled back expansion plans.