Lowe's 2014 Annual Report Download - page 29

Other Metrics 2014 2013 2012
Comparable sales increase 2 4.3 % 4.8 % 1.4 %
Total customer transactions (in millions) 857
828 804
Average ticket 3 $ 65.61
$ 64.52 $ 62.82
At end of year:
Number of stores 1,840
1,832 1,754
Sales floor square feet (in millions) 201
200 197
Average store size selling square feet (in thousands) 4 109
109 113
Return on average assets 5 8.1 % 6.8 % 5.7 %
Return on average shareholders' equity 6 24.4 % 17.7 % 13.1 %
Return on invested capital 7 13.9 % 11.5 % 9.3 %
1 EBIT margin, also referred to as operating margin, is defined as earnings before interest and taxes as a percentage of sales.
2 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. Acquired locations are included in the
comparable sales calculation beginning in the first full month following the first anniversary of the date of the acquisition.
Comparable sales include online sales, which did not have a meaningful impact for the periods presented.
3 Average ticket is defined as net sales divided by the total number of customer transactions.
4 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.
5 Return on average assets is defined as net earnings divided by average total assets for the last five quarters.
6 Return on average shareholders’ equity is defined as net earnings divided by average shareholders’ equity for the last five
quarters.
7 Return on invested capital is a non-GAAP financial measure. See below for additional information and a reconciliation to
the most comparable GAAP measure.
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.
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