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Q1 2010 Earnings Call Transcript

Transcript Call Date 05/17/2010

Operator: Good morning, everyone, and welcome to Lowe's Companies First Quarter 2010 Earnings Conference Call. This call is being recorded. (Operator Instructions). Statements made during this call will include forward-looking statement as defined in the Private Securities Litigation Reform Act of 1995. Management’s expectations and opinions reflected in those statements are subject to risk 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 & 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 - Chairman and CEO: Good morning and thanks for your interest in Lowe's. Following my remarks, Larry Stone will review our operational performance and Bob Hull will review our financial results. Sales for the quarter increased 4.7% and comparable store sales were positive 2.4%, our first positive comp in 15 quarters.

First quarter sales were positively impacted by favorable weather in March and April as well as government stimulus programs. However, I also feel our solid sales results suggest consumers are more willing to engage in discretionary home improvement. Even at the depths of the economic cycle the home remained important to consumers, and they continue to spend on repair and maintenance products. But encouragingly during the quarter, we saw signs that consumers were expanding their spending beyond repair and maintenance into more discretionary products and projects like riding mowers and gas grills.

Consumers appear to be more positive about the economic outlook as many are beginning to see a path to recovery supported by cautious signs that housing fundamentals are stabilizing. While employment remains a concern, on a relative basis the economic climate is much better than a year ago and consumers seem to feel better about the future.

That’s what we heard in our first quarter consumer survey. Our survey along with other national (measures) suggest consumer confidence remains low, but what we identified in this quarter survey was that consumers feel more comfortable that nationally the worst of the economic cycle is behind us. Caution remains but a growing sense of comfort has more consumers planning and executing discretionary projects and purchases.

In addition to signs consumers are reengaging in discretionary projects, sales in the quarter were also aided by favorable weather. Despite record snowfall in February, which led to a slow start for the quarter, warm weather and a compressed selling season in March and April gave consumers a reason to move outdoors and tackle for additional projects as well as repair damage caused by the harsh winter. We saw a strong performance across all of our outdoor product groups.

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