Our results once again beat expectations this quarter, with comparable sales up 5% for the total company and 5.1% for the U.S. on top of over 28% growth last year.
These results capped of outstanding financial results for fiscal 2021 with sales of $96.3 billion, up 6.9% on a comparable basis and earnings per share of $12.04, up 36% on an adjusted basis.
With these outstanding results, 100% of our stores earned a quarterly Winning Together profit-sharing bonus.
This $94 million payout is $24 million above the target payment level.
And in recognition for their hard work throughout the pandemic in 2021, we are awarding an incremental discretionary bonus of $265 million to our frontline associates.
Altogether, we rewarded our frontline associates with bonuses of over $350 million in the fourth quarter.
In Pro, we delivered growth of 23% and 54% on a two-year basis.
Our data shows that Pros who leverage our loyalty and credit offering spend 300% more than Pros not engaged in these programs.
On Lowes.com, sales grew 11.5% on top of 121% growth in the fourth quarter of 2020, which represents a two-year comp of 147% and nearly 11% sales penetration.
As we continue to expand our market-based delivery model, we're freeing up space in our 10,000 square foot store back rooms, which on average are considerably larger than our competition.
During the quarter, operating margin expanded approximately 115 basis points, leading to diluted earnings per share of $1.78, which is a 34% increase as compared to adjusted diluted earnings per share in the prior year.
are over 40 years old and will continue to require investments for upkeep and approximately two-thirds of Lowe's annual sales are generated from repair and maintenance activity.
As we close the year, we continue to give back to the communities where we operate, with total donations of $100 million in 2021 well over our pre-pandemic levels.
1 most admired specialty retailer for the second year in a row.
In the fourth quarter, U.S. comparable sales increased 5.1% and 35.2% on a two-year basis.
Growth was well balanced with 12 of 15 merchandising departments comping positive and was broad-based on a two-year basis with all 15 departments up more than 18% in that time frame.
As we continue to extend our private brand offering, we recently launched Origin 21 across several product categories in home decor.
1 position in outdoor power equipment with further share gains in battery outdoor power equipment, as we drove over 37% growth in this area for the quarter and over 118% on a two-year basis.
Also new for EGO is the industry's most powerful handheld battery-powered blower with power that will outperform the leading gas blower with 765 cubic feet per minute of blowing capacity.
This spring, we will launch our new Origin 21 patio collections, as well as our new style selection replacement cushions.
These cushions are made with 100% recycled plastic bottles and they are fade-resistant, UV-protected as well as easy to clean.
As Marvin mentioned, we delivered sales growth of 11.5% in the quarter and 147% on a two-year basis in the fourth quarter.
In recognition of their outstanding efforts, we awarded the discretionary year-end bonus of $6,000 for assistant store managers, $1,000 for department supervisors, $800 for full-time hourly associates and $400 for part-time hourly associates.
As Marvin mentioned, the combination of Winning Together and this discretionary year-end bonus will result in a payout of over $350 million for our frontline associates this quarter.
Over the last three years, we have created valuable career opportunities for our associates with the incremental 10,000 department supervisor roles and 1,600 ASM positions that we have added.
Since 2018, we have also invested well over $2 billion in incremental wage and equity programs for our frontline associates to ensure that we continue to offer a strong competitive wage and benefit package to our associates.
In fact, we are working on over 20 different PPI initiatives in our store operations this year.
While these two initiatives are just a few of the PPI deliverables planned for this year, we expect that these two initiatives alone will drive $100 million in productivity this year.
Home equity has increased due to rising home prices and consumer savings are about $2.5 trillion higher than pre-pandemic levels, positioning consumers for continued residential investments.
In 2021, we generated $8 billion in free cash flow driven by outstanding operating results, and we returned $15.1 billion to our shareholders through both share repurchases and dividends.
During the fourth quarter, we paid $551 million in dividends and repurchased approximately 16 million shares for $4 billion.
This brought the total to $13.1 billion in share repurchases for the year, ahead of our expectations of $12 billion.
Capital expenditures were $597 million in the quarter and nearly $1.9 billion for the full year as we continue to invest in strategic initiatives to both drive growth and enhance returns across the business.
Adjusted debt-to-EBITDAR stands at 1.98 times, well below our long-term leverage target of 2.75 times.
In the fourth quarter, we reported diluted earnings per share of $1.78, an increase of 34% compared to adjusted diluted earnings per share last year.
In the quarter, sales were $21.3 billion, reflecting a comparable sales increase of 5%.
Comparable average ticket increased 9.4% and with higher ticket sales in appliances, flooring and seasonal and outdoor living and 90 basis points of commodity inflation in both lumber and copper.
In the quarter, comp transaction count decreased 4.4%, but on a two-year basis, comp transactions increased 8.9%.
We continue to gain traction with our Total Home strategy as reflected in Pro growth of 23% and positive DIY comps on top of extremely strong DIY growth last year.
On Lowes.com, sales increased 11.5% in the quarter.
U.S. comp sales increased 5.1% in the fourth quarter and 35.2% on a two-year basis.
By month, our U.S. comparable sales were up 8.1% in November, up 7.4% in December and down 1.3% in January.
comp growth on a two-year basis from 2019 to 2021, November sales increased 33.8%, December increased 37.4% and January increased 33.9%.
Gross margin was 32.9% of sales in the fourth quarter, up 115 basis points from last year.
Product margin rate increased 65 basis points, driven by our disciplined pricing and cost management strategies.
Improvements in both shrink and credit revenue benefited gross margin by 50 basis points and 25 basis points, respectively.
These benefits were partially offset by roughly 30 basis points of pressure related to higher transportation and importation costs, as well as the expansion of our supply chain network.
We levered 15 basis points versus LY, driven by higher sales and our relentless focus on productivity.
This quarter, we incurred $50 million of COVID-related expenses as compared to $165 million of COVID-related expenses last year.
This reduction in these expenses generated 60 basis points of SG&A leverage.
Additionally, we incurred $150 million of expenses related to the U.S. stores reset in the fourth quarter of last year.
As we did not incur any material expenses related to this project in '21, this generated approximately 75 basis points of SG&A leverage versus LY.
These benefits were pressured by 100 basis points related to the discretionary year-end bonus of $215 million for our store-based frontline associates.
Operating profit was over $1.8 billion in the quarter, an increase of 21% versus LY.
Operating margin of 8.7% for the quarter increased 115 basis points over last year, largely driven by higher gross margin rate, as well as favorable SG&A leverage.
The effective tax rate was 25.3% in the quarter, which is in line with prior year.
At year-end, inventory was $17.6 billion, up $920 million from Q3 and in line with seasonal trends and consistent with our effort to land spring products earlier.
Driven by both improved operating performance and a disciplined capital allocation strategy, we delivered return on invested capital of 35% for the year, up 760 basis points from 2020.
Now, turning to our 2022 financial outlook.
And based on the continued momentum that we are seeing in Pro sales, as well as higher expectations for commodity inflation, we are raising our sales outlook for 2022 to a range of between $97 billion to $99 billion for the year, representing comparable sales of down 1% to up 1%.
Keep in mind that we are cycling over an estimated 300 basis points of stimulus in the first quarter.
Also, as a reminder, our 2022 sales outlook includes a 53rd week, which equates to approximately $1 billion to $1.5 billion in sales.
With higher projected sales, improving gross margin outlook and continued execution of our PPI initiatives, we are raising our outlook for operating margin to a range of 12.8% to 13% from a prior range of 12.5% to 12.8% for the full year.
We are also raising our outlook for diluted earnings per share to a range of $13.10 to $13.60 from a prior range of $12.25 to $13.
In 2022, we continue to expect capital expenditures of approximately $2 billion and share repurchases of approximately $12 billion.
Finally, we are raising our outlook for return on invested capital to above 36% from our original outlook of approximately 35%.

Summary:
During the quarter, operating margin expanded approximately 115 basis points, leading to diluted earnings per share of $1.78, which is a 34% increase as compared to adjusted diluted earnings per share in the prior year.
1 most admired specialty retailer for the second year in a row.
1 position in outdoor power equipment with further share gains in battery outdoor power equipment, as we drove over 37% growth in this area for the quarter and over 118% on a two-year basis.
Since 2018, we have also invested well over $2 billion in incremental wage and equity programs for our frontline associates to ensure that we continue to offer a strong competitive wage and benefit package to our associates.
In the fourth quarter, we reported diluted earnings per share of $1.78, an increase of 34% compared to adjusted diluted earnings per share last year.
In the quarter, sales were $21.3 billion, reflecting a comparable sales increase of 5%.
Now, turning to our 2022 financial outlook.
And based on the continued momentum that we are seeing in Pro sales, as well as higher expectations for commodity inflation, we are raising our sales outlook for 2022 to a range of between $97 billion to $99 billion for the year, representing comparable sales of down 1% to up 1%.
Also, as a reminder, our 2022 sales outlook includes a 53rd week, which equates to approximately $1 billion to $1.5 billion in sales.
We are also raising our outlook for diluted earnings per share to a range of $13.10 to $13.60 from a prior range of $12.25 to $13.
In 2022, we continue to expect capital expenditures of approximately $2 billion and share repurchases of approximately $12 billion.