Lowe's 2013 Annual Report Download - page 26

18
Other Metrics
2013
2012
2011
Comparable sales increase 3, 4
4.8
%
1.4
%
0.0
%
Total customer transactions (in millions) 1
828
804
810
Average ticket 5
$
64.52
$
62.82
$
62.00
At end of year:
Number of stores 6
1,832
1,754
1,745
Sales floor square feet (in millions)
200
197
197
Average store size selling square feet (in thousands) 7
109
113
113
Return on average assets 8
6.8
%
5.7
%
5.4
%
Return on average shareholders' equity 9
17.7
%
13.1
%
10.7
%
Return on invested capital 10
11.5
%
9.3
%
8.7
%
1 Fiscal years 2013 and 2012 had 52 weeks. Fiscal year 2011 had 53 weeks.
2 EBIT margin, also referred to as operating margin, is defined as earnings before interest and taxes as a percentage of sales.
3 A comparable location is defined as a location that has been open longer than 13 months. A location that is identified for
relocation is no longer considered comparable one month prior to its relocation. The relocated location must then remain
open longer than 13 months to be considered comparable. A location we have decided to close is no longer considered
comparable as of the beginning of the month in which we announce its closing. Comparable sales include online sales.
4 Comparable sales are based on comparable 52-week periods for 2013 and 2012 and comparable 53-week periods for 2011.
5 Average ticket is defined as net sales divided by the total number of customer transactions.
6 The number of stores as of fiscal year end 2013 includes 72 stores from the acquisition of the majority of assets of Orchard on
August 30, 2013. The average store selling square footage is approximately 36,000 for an Orchard store.
7 Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of
the period. The average Lowe’s home improvement store has approximately 112,000 square feet of retail selling space, while
the average Orchard store has approximately 36,000 square feet of retail selling space.
8 Return on average assets is defined as net earnings divided by average total assets for the last five quarters.
9 Return on average shareholders’ equity is defined as net earnings divided by average shareholders’ equity for the last five
quarters.
10 Return on invested capital is a non-GAAP financial measure. See below for additional information.
Return on Invested Capital
Return on Invested Capital (ROIC) is considered a non-GAAP financial measure. We believe ROIC is a meaningful metric for
investors because it measures how effectively the Company uses capital to generate profits.
We define ROIC as trailing four quarters’ net operating profit after tax divided by the average of ending debt and equity for the
last five quarters. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly,
the method used by our management to calculate ROIC may differ from the methods other companies use to calculate their
ROIC. We encourage you to understand the methods used by another company to calculate its ROIC before comparing its
ROIC to ours.
We consider return on average debt and equity to be the financial measure computed in accordance with generally accepted
accounting principles that is the most directly comparable GAAP financial measure to ROIC. The difference between these
two measures is that ROIC adjusts net earnings to exclude tax adjusted interest expense.
The calculation of ROIC, together with a reconciliation to the calculation of return on average debt and equity, the most
comparable GAAP financial measure, is as follows: