LOWES COMPANIES INC

Net Sales – Net sales in the second quarter of 2024 decreased 5.5% to $23.6 billion. Comparable sales declined 5.1%, consisting of a 5.9% decline in comparable customer transactions, partially offset by a 0.8% increase in comparable average ticket.

During the second quarter of 2024, we experienced growth in Building Materials and performance above company average in Rough Plumbing, Electrical, and Millwork which reflect continued strong demand with the Pro customer. Comparable sales in Appliances also exceeded the company average as we continue to be an industry leader in this category.

Net sales decreased 5.0% to $45.0 billion for the first six months of 2024 compared to 2023. Comparable sales also declined 4.6% over the same period, driven by a 4.6% decline in comparable customer transactions, while comparable average ticket was flat.

Gross Margin – For the second quarter of 2024, gross margin as a percentage of sales decreased 19 basis points. The gross margin contraction for the quarter is driven by higher costs associated with investments in our supply chain, partially offset by lower transportation costs and ongoing PPI initiatives.

Gross margin as a percentage of sales decreased 33 basis points in the first six months of 2024 compared to 2023, primarily due to the same factors that impacted gross margin for the second quarter, as well as a decline in credit revenue.

SG&A – For the second quarter of 2024, SG&A expense deleveraged 69 basis points as a percentage of sales compared to the second quarter of 2023, primarily due to cycling the prior year favorable legal settlement and lower sales, partially offset by the current year gain on contingent consideration associated with the fiscal 2022 sale of the Canadian retail business and our ongoing PPI initiatives to manage expenses in-line with sales trends.

SG&A expense as a percentage of sales deleveraged 115 basis points as a percentage of sales for the first six months of 2024 compared to 2023, primarily due to the same factors that impacted gross margin for the second quarter.

Depreciation and Amortization – Depreciation and amortization deleveraged eight basis points as a percentage of sales for the second quarter of 2024 compared to 2023.

Depreciation and amortization deleveraged 11 basis points as a percentage of sales for the first six months of 2024 compared to 2023.

Interest – Net – Net interest expense for the second quarter of 2024 leveraged two basis points as a percentage of sales.

Net interest expense for the first six months of 2024 deleveraged four basis points as a percentage of sales.

Income Tax Provision – Our effective income tax rates were 23.9% and 24.6% for the three months ended August 2, 2024 and August 4, 2023, respe ctively, and 23.8% and 23.9% for the six months ended August 2, 2024 and August 4, 2023, respectively.