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Lowe's Companies Inc LOW
Q4 2011 Earnings Call Transcript

Transcript Call Date 02/27/2012

Operator: Good morning, everyone, and welcome to Lowe's Companies Fourth Quarter 2011 Fiscal Year 2011 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 reconciliation to 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, President and CEO; Mr. Robert Gfeller, Executive Vice President of Merchandising; 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, President and CEO: Good morning and thanks for your interest in Lowe's. Following my remarks, Bob Gfeller will review our operational performance and Bob Hull will review our financial results in detail. But first, let me share a summary of our fourth quarter performance and tell you how we are thinking about 2012.

Sales for the quarter increased 11% including the 53rd week, while comparable store sales were positive 3.4%. Comps were positive in all regions of the U.S as well as in 13 or 16 product categories. Comp transactions increased 3.8% in the fourth quarter and comp average ticket decreased 0.4%. While gross margin contracted largely in line with our expectations, we had good operating expense control and delivered earnings per share of $0.26 exceeding our guidance for the quarter.

Delivering on our commitment to return excess cash to shareholders in the fourth quarter, we repurchased $500 million or 20.7 million shares and paid $177 million in dividends. Overall, I am encouraged by the progress we made in 2011 toward delivering better customer experiences and transforming our business to drive long-term sales growth and increased profitability and shareholder value. I would like to thank our hardworking employees for their ongoing dedication and customer focus.

At our analyst and investor conference in December we outlined how we intend to build upon our core strengths and strategically invest in ways that will better position Lowe's for success. Among our top strategic priorities, we accelerated our investment in technology and store infrastructure in 2011 and increased our efforts to improve the customer experience. I'll share some specifics momentarily. We also refined our pricing and merchandising strategies and processes, actions that Bob Gfeller will review in a few minutes. With these enhancements in place, we are well positioned to drive stronger comparable store sales growth and expanded operating margins in 2012.

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