EDGAR 10-K Filing

Company CIK: 60667
Filing Year: 2025
Filename: 60667_10-K_2025_0000060667-25-000049.json

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ITEM 1. BUSINESS
Item 1 - Business
General Information
Lowe’s Companies, Inc. and subsidiaries (the Company or Lowe’s) is a Fortune® 50 company and the world’s second largest home improvement retailer. As of January 31, 2025, Lowe’s operated 1,748 home improvement stores and outlets in the United States, representing approximately 195 million square feet of retail selling space.
Lowe’s was founded in 1921 with the opening of its first hardware store in North Wilkesboro, North Carolina. The Company was incorporated in North Carolina in 1952 and has been publicly held since 1961. The Company’s common stock is listed on the New York Stock Exchange - ticker symbol “LOW”.
For additional information about the Company’s performance and financial condition, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report.
Our Strategy
Lowe’s is an omnichannel retailer whose focus is on helping customers solve problems and fulfill dreams for their homes by providing an excellent customer experience, creating a great place to work for our associates, and improving our communities, which we believe will create long-term, sustainable value for our shareholders. In fiscal 2024, we continued to execute on our Total Home strategy that was introduced in fiscal 2020, by focusing on serving the professional customer (Pro customer), accelerating our online business, expanding installation services, improving localization efforts and elevating our product assortment. In December 2024, we updated our Total Home strategy, aligned with the key drivers of home improvement demand, to help our customers solve their home improvement needs with more value and exceptional service. The five pillars of our Total Home strategy are as follows:
Drive
Pro penetration
Accelerate
online sales
Expand
home services
Create a
loyalty ecosystem
Increase
space productivity
•We continue to transform our Pro offerings to drive Pro penetration by continuing to enhance our Pro product assortment, investing in inventory of high-volume Pro products, launching our redesigned loyalty program, improving job site delivery capabilities, and rolling out our new Pro extended aisle.
•We are investing in our omnichannel retail capabilities to accelerate our online business through project design tools and our online product marketplace.
•We are expanding our installation services to create a high value simplified installation solution, which are provided by our network of independent installers or outsourced to our third-party model that sells, furnishes, and installs both smaller refresh projects and more complex projects.
•We are creating a loyalty ecosystem that drives brand preference and includes building out our MyLowe’s Rewards infrastructure for both Pro and do-it-yourself (DIY) customers.
•Finally, we are increasing space productivity by optimizing our assortments and tailoring them to the local markets, and balancing our value-oriented private brands with our national brands.
Our Customers and Market
The home improvement market in which we operate is highly fragmented, serving Pro customers, individual homeowners, and renters completing a wide array of projects that vary along the spectrum of DIY and do-it-for-me (DIFM). The Pro customer at Lowe’s is primarily the small to medium sized Pro, which includes three broad categories: tradespeople, repair and remodelers, and property managers.
There are many variables that affect consumer demand for the home improvement products and services we offer. Key indicators we monitor include home price appreciation, age of the housing stock, real disposable personal income, and housing turnover. We also monitor demographic and societal trends that shape home improvement industry growth over time as the US population moves through major life stages and events. These include strong millennial household formation, an increased preference among older generations to age in place, and the persistence of remote work.
Our Competition
The home improvement industry includes a broad competitive landscape that continues to evolve. We compete with national and regional home improvement warehouse chains and lumber yards in most of the markets we serve. We also compete with traditional hardware, plumbing, electrical, and home supply retailers, as well as paint stores, lumber yards, garden centers, and maintenance and repair organizations. In addition, we compete with general merchandise retailers, home goods specialty stores, warehouse clubs, online retailers, other specialty retailers, providers of equipment and tool rental, service providers that install home improvement products, and wholesalers that provide home-related products and services to homeowners, renters, businesses, and the government.
Location of stores, product assortment, product pricing, and customer service continue to be key competitive factors in our industry, while the evolution of technology, including artificial intelligence (AI) and machine learning technologies, expansion of fulfillment capabilities, and customer expectations also underscore the importance of omnichannel capabilities as a competitive factor. See further discussion of competition in Item 1A, “Risk Factors”, of this Annual Report.
Our Omnichannel Capabilities
We are committed to meeting customer demand to shop however, whenever, and wherever they choose. Our omnichannel network provides a single view of the customer, no matter where they place their order, whether in-store, online, on-site or through the contact center. This allows our customers to move from channel to channel with simple and seamless transitions even within the same transaction. For example, for many projects, the majority of our customers conduct research online before making an in-store purchase. For purchases made on Lowes.com, customers may pick up their purchase in-store at the customer service desk, curbside, or from touchless lockers, or have their purchase delivered to their home or business. In addition, flexible fulfillment options are available for in-store purchases and those made through the contact center. Regardless of the channels through which customers choose to engage with us, we strive to provide them with a seamless experience across channels and an extended aisle of products, enabled by our flexible fulfillment capabilities. Our ability to sell products in-store, online, on-site, or through our contact centers speaks to our leverage of our existing infrastructure with the omnichannel capabilities we continue to introduce.
In-Store
Our 1,748 Lowe’s-branded home improvement stores and outlet stores are generally open seven days per week and average approximately 112,000 square feet of retail selling space, plus approximately 32,000 square feet of outdoor garden center selling space. Our home improvement stores offer similar products and services, with certain variations based on localization, along with a dedicated team of knowledgeable and friendly frontline associates available to assist our customers. We continue to develop and implement productivity tools, including our front-end transformation and freight flow optimization initiatives, to enhance the efficiency of our sales associates and improve the customer experience. Our Lowe’s Outlet stores have a smaller format and offer value to our customers through incremental savings on discontinued, overstocked, or scratch and dent items.
Online
Through our websites and mobile applications, we seek to empower consumers by providing a 24/7 shopping experience, product information, customer ratings and reviews, buying guides, how-to videos, and other information. These tools help consumers make more informed purchasing decisions and give them increased confidence to undertake home improvement projects. We enable customers to choose from a variety of fulfillment options, including buying online and picking up in-store, curbside pick-up, same-day delivery through our gig network, and shipment to their homes or businesses. Further, we also offer digital inspiration, design, and project management tools across our destination home improvement categories.
On-Site
We have on-site specialists available for retail and Pro customers to assist them in selecting products and services for their projects. Our Pro sales managers meet with Pro customers at their place of business or on a job site and leverage nearby stores and our distribution network to ensure we meet customer needs for products and resources. In addition, our In-Home Sales program is available in the majority of our stores to discuss various exterior projects such as windows, doors, and fencing, whose characteristics lend themselves to an in-home consultative sales approach.
Contact Centers
Lowe’s operates contact centers utilizing a combination of internal staffing and third-party providers. These contact centers help Lowe’s enable an omnichannel customer experience by providing the ability to tender sales, assist with order management, coordinate deliveries, manage after-sale installations, and answer general customer questions via phone, mail, e-mail, live chat, and social media.
Our Products
Product Selection
To meet customers’ varying needs, we offer a complete line of products for construction, maintenance, repair, remodeling, and decorating. We offer home improvement products in the following categories: Appliances, Seasonal & Outdoor Living, Lumber, Lawn & Garden, Kitchens & Bath, Hardware, Building Materials, Millwork, Paint, Rough Plumbing, Tools, Electrical, Flooring, and Décor. A typical Lowe’s-branded home improvement store stocks approximately 40,000 items, with additional items available through our online selling channel. Our product assortments offered in-store strive to meet the needs of the local market for the Pro and DIY customer. See Note 16 of the Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data”, of this Annual Report for historical revenues by product category for each of the last three fiscal years.
We are committed to offering a wide selection of national brand-name merchandise complemented by our selection of high-value private brands. We are balancing our value-oriented private brands with our national power brands, intensifying our localization efforts and expanding our rural assortment. In addition, we are dedicated to selling products sourced in a socially responsible, efficient, and cost-effective manner.
Supply Chain
We source our products from vendors worldwide and believe that alternative and competitive suppliers are available for virtually all of our products. Whenever possible, we purchase directly from manufacturers to provide savings for customers and improve our gross margin.
To efficiently replenish our stores and meet our customers’ expectations for fast fulfillment and delivery, we own and operate more than 120 supply chain facilities in our network. These facilities include regional distribution centers (RDCs), flatbed distribution centers (FDCs), import distribution centers (IDCs), bulk distribution centers (BDCs), cross-dock terminals (XDTs), and Fulfillment Centers (FCs). Fulfillment centers, along with many of our stores, ship product directly to our customers. In addition, we leverage our existing supply chain to deliver directly to our Pro customers. Each one of these distribution nodes plays a critical role in our Total Home strategy and collectively enable our products to get to their destination as efficiently as possible.
The FDCs distribute merchandise that requires special handling due to size or type of packaging such as lumber, boards, panel products, pipe, siding, ladders, and building materials. On average, each RDC and FDC serves approximately 115 stores. Our Pro fulfillment network stocks deeper quantities of our top Pro assortments and has expanded capabilities to handle large orders on multiple flat bed trucks. Our IDCs were expanded to create more capacity to hold import product at the coast, which improves our network’s agility to move inventory where and when it is needed. Our BDCs handle appliances and other big and bulky products, and our XDTs fulfill final mile box truck deliveries of these products.
Our supply chain supports every pillar of our Total Home strategy, and as such, we continue to invest and transform our network to unlock our omnichannel capabilities while keeping our organization’s sustainability goals top of mind. As part of the completion of the rollout of our market-based delivery model, we expanded to additional geographic areas and enhanced our distribution capacity for big and bulky products. As of fiscal year 2024, we have finalized the roll-out of our market-based delivery model.
We have also been focused on improving the speed of our delivery capabilities for our customers. As of fiscal year 2024, most parcel-eligible items fulfilled by Lowe’s can be ordered by a customer and delivered within two business days or less at standard shipping rates. Also, the nationwide expansion of our gig provider network enables same-day delivery of certain products from our stores, and as of fiscal 2024, we have the ability to deliver major appliances next-day in almost every zip code in the United States. Customer needs and buying patterns are constantly changing, and our supply chain will continue to evolve to meet their needs. We are building an omnichannel supply chain that positions the right products in the right quantities in the right places, and operates with greater network capacity with better flow management and optimization.
Our Services
Installed Sales
We offer installation services through independent contractors in many of our product categories, with Kitchen & Bath, Flooring, Appliances, Millwork, and Rough Plumbing accounting for the majority of installed sales. Our installed sales model, which separates selling and project administration tasks, allows our sales associates to focus on project selling, while project managers ensure that the details related to installing the products are efficiently executed. We are simplifying the process through a team of remote associates that we call our central selling team. This team handles building quotes, answering questions over video or phone call, and providing personalized support to our customers. We are also implementing technology that allows our customers to finalize their installation contract and checkout on lowes.com or mobile application, so they do not need to return to the store. Installed sales, which includes both product and labor, accounted for approximately 5% of total sales in fiscal 2024.
Lowe’s Protection Plans and Repair Services
We offer extended protection plans for certain products within the Appliances, Kitchens & Bath, Décor, Millwork, Rough Plumbing, Electrical, Seasonal & Outdoor Living, Tools, and Hardware categories. These protection plans provide customers with product protection that enhances the coverage offered by the manufacturer’s warranty and provide additional benefits and repair services that extend beyond the manufacturer’s warranty.
Seasonality and Working Capital
The home improvement business in general is subject to seasonal influences, particularly related to the spring selling season. Historically, we have realized the highest volume of sales during our second fiscal quarter (May, June, and July) and the lowest volume of sales during our fourth fiscal quarter (November, December, and January). Accordingly, our working capital requirements have historically been greater during our fourth fiscal quarter as we build inventory in anticipation of the spring selling season and as we experience lower fourth fiscal quarter sales volumes. We fund our working capital requirements primarily through cash flows generated from operations, but also with short-term borrowings, as needed. For more detailed information, see the Financial Condition, Liquidity and Capital Resources section in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report.
Intellectual Property
The name “Lowe’s” is a registered service mark of one of our wholly-owned subsidiaries. We consider this mark and logo and the accompanying goodwill and name recognition to be valuable to our business. This subsidiary owns and maintains various additional registered and unregistered trademarks, service marks and trade names, including private brand product names, such as, “Kobalt”, “STAINMASTER”, and “allen+roth.” This subsidiary also maintains various Internet domain names that are important to our business, and we also own registered and unregistered copyrights. In addition, we maintain patent portfolios related to some of our products and services and seek to patent or otherwise protect certain innovations that we incorporate into our products, services, or business operations.
Government Regulation
We are subject to a wide array of federal, state, and local laws and regulations. We do not currently expect compliance with these laws and regulations to have a material effect on our capital expenditures, results of operations, and competitive position as compared to prior periods.
Human Capital
When it comes to attracting and retaining top talent, Lowe’s strives to be the employer of choice in retail. At Lowe’s we are committed to creating valuable career opportunities for our associates, supporting them and the communities where they live, and cultivating a culture that invites and encourages diverse opinions and ideas. We would like our associates to see Lowe’s as a “Home to Possibility” with good jobs, a sense of belonging, and a promising future.
As a testament to our commitments, in fiscal 2024 we received several notable employer of choice awards, including being named on the Disability:IN National Best Places to Work for Disability Inclusion, Fortune’s World’s Most Admired Companies Specialty Retailer, 2024 Great Place to Work Certified - U.S. and India, Fair360 Top 50 Noteworthy Company for Workplace Fairness, 2024 American Opportunity Index Top 100 Company, and a Best Corporation for Veteran’s Business Enterprises of the Year.
Our People
As of January 31, 2025, Lowe’s employed approximately 161,000 full-time associates and 109,000 part-time associates, primarily in the United States and India. During the spring season, we temporarily expand our workforce by hiring associates in part-time and full-time positions to meet the elevated levels of demand.
At Lowe’s, we have a proactive associate listening strategy, most notably through our annual engagement survey. In fiscal 2024, more than 90% of our associates participated in our survey, and our people leaders use the feedback to improve our associate experience.
Creating Good Jobs
We have a strong track record of investing in our workforce by offering locally competitive salaries and wages. As of fiscal 2024, our minimum wage starts at $15 per hour, which helps us remain competitive for talent in all of our markets. These investments include incremental wages and share-based compensation for our frontline associates, which included creating many new roles for our associates to grow into as they advance along their career path.
We offer an array of health, welfare, and financial benefits to our full-time and part-time associates, including health care and insurance benefits, retirement plans, an employee stock purchase plan, paid time off, and leave programs, among many others. We have implemented workforce management tools that enable us to offer various scheduling options to our full-time associates to foster an improved experience in balancing their work and life responsibilities. This includes such options for a shortened workweek, consistent shifts, or consecutive days off.
Our focus on the associate experience begins at initial application. The implementation of improved technology in the hiring process has simplified the experience for those looking to join Lowe’s and helped to drive the experience overall. We have Spanish language capabilities to promote bilingual hiring by guiding Spanish-speaking candidates through the full application process.
Providing a safe environment for both working and shopping is our highest priority at Lowe’s. We strive to maintain a culture of safety, which begins with our leaders modeling the behaviors we want our associates to adopt. We embed safety into associate onboarding, developmental e-learning, and on-the-job training.
Sense of Belonging
We believe that by building diverse and inclusive teams with a range of perspectives, backgrounds, and experiences, and equal opportunity for all, we drive better ideas, positive business results, and improve service through a deeper connection with the diverse communities we serve. Earlier this year, we evolved our diversity and inclusion initiatives, combining our eight Business Resource Groups into one umbrella associate engagement organization. By shifting to one, unified program, Lowe’s is able to foster networking and development for all associates across all areas of the business. Additionally, we eliminated our sponsorship of outside festivals, parades, and fairs to focus on our four community pillars: safe and affordable housing, community improvements, skilled trades education, and disaster response. Finally, we are evaluating our participation in external surveys, factoring in the goals of each survey and whether we will gain any actionable insights as a result of our participation. These changes were made with the goal of creating a more respectful and inclusive workplace for all of our associates.
Promising Future
We are committed to securing top talent and providing ongoing training and other developmental opportunities to facilitate meaningful careers at Lowe’s. We offer a variety of role-specific leadership and development programs that build and reinforce functional-technical/professional skills, business acumen, and leadership skills to prepare high-performing leaders for their next role. Our focus on leadership development enables us to grow talent internally and has resulted in more than 85% of store leadership positions being filled internally in the last year.
Our Lowe's University offerings include the District Manager and Store Manager immersive week-long leadership experience programs, delivered from the Lowe’s University training center; the virtually-delivered store department supervisor fundamentals series; the virtually-delivered field supply chain leadership director, manager, and supervisor experience programs; and the certification programs for store and technology associates that further develop their skills and knowledge base. In addition, our in-person Lowe’s University offerings include an Assistant Store Manager leadership training to further develop our store leaders.
Additionally, through Lowe’s Track to the Trades program, we offer all Lowe’s associates the opportunity to enroll in programs to complete apprentice certifications in electrical, plumbing, HVAC, appliance repair, or multi-family maintenance. The program also connects them with Pros to help them start a career in their area of interest. The Track to the Trades program
demonstrates Lowe’s commitment to our industry and the communities we serve. This program, combined with our tuition-free education program, are further examples of how we are investing in the development of our associates.
Corporate Responsibility
We take our role as a Fortune® 50 retailer seriously by managing our business responsibly and focusing on serving our associates and improving the communities where we live and work. Sustainability objectives are integrated into our business operations, particularly by focusing on the three pillars of our sustainability strategy: our people and communities, product sustainability, and operational excellence, which includes reducing the environmental footprint of our operations, which we believe will help drive long-term shareholder value. In fiscal 2024, for the sixth consecutive year, Lowe’s was included in the Dow Jones Sustainability North America Index based on our environmental, social, and operational practices.
Investing in our Communities
We understand the important role Lowe’s plays in supporting our communities through our philanthropic efforts. With our community engagement initiatives and continued partnerships with nonprofits across the nation, we are revitalizing neighborhoods, improving community spaces, responding when natural disasters strike, and preparing the next generation of skilled tradespeople. We carry out these initiatives with a special focus on veterans, the active military community, and first responders. Additionally, since awarding its first Gable Grants in 2023, the Lowe’s Foundation has invested over $25 million to help expand skilled trades career pathways through a growing network of community colleges and nonprofits in rural and urban communities. From funding new skilled trade facilities and instructors to accreditation programs, these grants support carpentry and construction, HVAC, electrical, plumbing, and appliance repair training.
Product Sustainability
We are committed to promoting sustainable practices throughout our supply chain and providing customers with eco-friendly, high quality, and safe products. Our products undergo a thorough selection process, beginning with our sourcing decisions. Through collaboration and established management systems, we monitor our suppliers’ practices to secure high-quality products from suppliers who support worker rights and protect the environment. Lowe’s human rights policy supports the fundamental principles of human rights, as defined by the “Universal Declaration of Human Rights.” We continue to hold all suppliers to our rigorous standards through our human rights policy, our conflict minerals policy, and our Vendor Code of Conduct, which includes enhanced environmental standards.
In addition, we have a wood sourcing policy with principles that we expect our vendors to follow, including no illegal logging; no deforestation; no sourcing of endangered species; the protection and preservation of biodiversity; and undergoing and securing Free, Prior and Informed Consent, as defined by the United Nations, wherever applicable. We have enhanced our wood sourcing policy to include a more robust risk-based approach, including new wood sourcing risk levels by country, improved monitoring practices, and a new forestry grievance process.
We are dedicated to empowering our customers to lead more sustainable lives while minimizing the environmental footprint of our products. We continue to expand our offering of independently certified products that have validated environmental claims, preserve and protect natural resources, and help customers decrease energy and water consumption. We work with local and regional utilities to offer customers assorted rebates for a variety of efficient products including ENERGY STAR® and WaterSense®.
Reducing our Environmental Footprint
We are committed to mitigating climate change by reducing the environmental impact of our operations and supply chain through reducing carbon emissions with investments in energy efficiency, use of renewable energy, environmentally friendly transportation practices, and innovative water and waste management systems.
Greenhouse Gas (GHG) Emissions
In December 2022, Lowe’s established a goal to reach net-zero emissions across the Company’s scope 1, 2, and 3 GHG emissions by 2050. Lowe’s has since increased its interim emissions targets for 2030 and committed to decreasing its scope 1 and 2 emissions by 42% and reducing scope 3 emissions by 25% below 2021 levels. We report our progress annually in Lowe’s Corporate Responsibility Report, to the Carbon Disclosure Project (CDP), and via lowes.com/net-zero. The contents of these reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the Securities and Exchange Commission (SEC).
To reach these targets, Lowe’s will focus on increasing operational efficiency and working to reduce emissions across Lowe's entire value chain. We are making further investments in energy efficiency and renewable energy within our operations, while exploring emerging technologies to reduce emissions associated with our vehicle fleet and facilities. Over the past three years, we have spent more than $300 million across multiple projects including replacing stores’ aging HVAC units with high efficiency models, installing and updating building management systems, installing pallet grinders, and completing indoor LED lighting upgrades. Lowe’s continues to partner with our suppliers to decrease our scope 3 GHG emissions. We encourage suppliers to report their emissions to CDP, giving suppliers more insight into how they generate emissions, which is the first step toward helping them reduce upstream emissions. This collaboration can help suppliers increase their operational efficiency and reduce their emissions through the use of renewable energy and low-carbon innovations. When our suppliers mitigate their impacts on the climate, Lowe’s own scope 3 emissions can be reduced.
Procuring renewable energy is another lever to reduce our emissions footprint. Our first renewable power purchase agreement, the Mesquite Star wind farm in Texas, went live in fiscal 2020 and is now in its fifth year of operation. As we strive to establish a pipeline of other offsite renewable projects, several projects are planned to become active over the next few years. Lowe’s is a member of the Clean Energy Buyers Association to evaluate and explore new opportunities and technologies across renewable energy markets (e.g., community solar, power purchase agreements), as well as implementing on-site solar generation in multiple states. In fiscal 2023, we announced plans to install rooftop solar panels at 174 store and distribution center locations nationwide, including more than 50 sites already in operation. More than 100 sites were operational by the end of fiscal 2024. Once each site is completed, the solar panels will provide approximately 90% of the energy usage at each location.
We are dedicated to promoting sustainable practices in the transportation industry, and we collaborate with the Environmental Protection Agency’s (EPA’s) SmartWay program to reduce transportation emissions by managing and reducing fuel usage through incentives for freight contractors to improve efficiency. We are an EPA SmartWay program partner and aim for 100% SmartWay certification for our transportation providers. This program provides access to comprehensive data and oversight of scope 3 emissions associated with our U.S. transportation footprint.
Waste
We partner with suppliers to improve recycling and waste diversion, develop regional management processes, measure waste streams, and conduct waste audits. At a local level, store waste, including cardboard, broken appliances, and wood pallets, is recycled through national and regional partners, and we provide in-store recycling and reuse centers for our customers to bring in plastic planter pots, compact fluorescent lamp bulbs, plastic bags, and rechargeable batteries. In our fourth year collaborating with How2Recycle, we continue to educate customers and encourage proper recycling of our product packaging. As technology and innovative practices improve, we will continue to explore opportunities to participate in the circular economy.
Water
While our water consumption is modest compared with other industries, we continue to focus on reducing water consumption within our operations. We use smart irrigation controllers for efficient watering at most stores and have been exploring other water-efficient measures to increase water savings in our stores and garden centers. Additionally, we use leak detection technology to catch leaks as they occur to prevent unnecessary water use. We also have protocols in place to manage the disposal of chemicals to prevent release into waterways of the communities we serve.
Corporate Responsibility Reporting
Lowe’s participates in the CDP’s climate change, forests, and water security questionnaires to benchmark and quantify our environmental practices and provide transparency on our progress. Lowe’s continues to externally verify our scope 1 and 2 GHG emissions, as well as scope 3 Use of Sold Product GHG emissions and water usage data to increase confidence in our reporting. Additionally, our annual Corporate Responsibility Report is guided by the Sustainable Accounting Standards Board, the Global Reporting Initiative, and the U.N. Sustainable Development Goals, and we publish our Task Force on Climate-related Financial Disclosures Report to assess our climate-related risks and opportunities and better understand the potential impacts on our value chain.
Additional information regarding our activities related to our human capital strategy, as well as our workforce diversity data, latest community improvement projects, and sustainability efforts can be found in our Corporate Responsibility Report and Culture, Diversity & Inclusion Report, which are published annually and can be found on our website at responsibility.lowes.com. The contents of these reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.
Available Information
Our Annual Report, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are made available free of charge through our Internet website at ir.lowes.com, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC. The SEC maintains an Internet site, www.sec.gov, that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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ITEM 1A. RISK FACTORS
Item 1A - Risk Factors
We describe below certain risks that could adversely affect our results of operations, financial condition, business reputation, or business prospects. These risk factors may change from time to time and may be amended, supplemented, or superseded by updates to the risk factors contained in our future periodic reports on Form 10-K, Form 10-Q, and reports on other forms we file with the SEC. All forward-looking statements about our future results of operations or other matters made by us in this Annual Report, in our Annual Report to Lowe’s Shareholders, and in our subsequently filed reports to the SEC, as well as in our press releases and other public communications, are qualified by the risks described below.
You should read these risk factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our consolidated financial statements and related notes in Item 8. There also may be other factors that we cannot anticipate or that are not described in this Annual Report generally because we do not currently perceive them to be material. Those factors could cause results to differ materially from our expectations. In connection with any investment decision with respect to our securities, you should carefully consider the following risk factors, as well as the other information contained in this report and our other filings with the SEC.
Strategic, Competitive, Operational, and Reputational Risks
We may be unable to adapt our business concept in a rapidly evolving retail environment to address the changing shopping habits, demands, and demographics of our customers.
The home improvement retail environment, like the retail environment generally, is rapidly evolving, and adapting our business concept to respond to our customers’ changing shopping habits and demands and their changing demographics is critical to our future success. Our success is dependent on our ability to identify and respond to the economic, social, style, and other trends that affect demographic and consumer preferences in a variety of our merchandise categories and service offerings, as well as consumer spending. Customers’ expectations about how they wish to research, purchase, and receive products and services have also evolved. It is difficult to predict the mix of products and services that our customers will demand. As our customers expect a more personalized experience, our ability to offer more localized assortments of our merchandise to appeal to local tastes within each customer group is important to our ability to effectively meet customer expectations. Customers also have evolving preferences and expectations related to the sustainability of our products and operations. If we do not successfully differentiate the shopping experience to meet the individual needs and expectations of or within a customer group, we may lose market share with respect to those customers.
Failure to identify such trends, adapt our business concept, implement an increasingly localized merchandising assortment, and implement related strategic initiatives successfully, could negatively affect our relationship with our customers, the demand for the home improvement products and services we sell, the rate of growth of our business, our market share, and results of operations.
We may not be able to realize the intended benefits of our strategic initiatives focused on providing an omnichannel shopping experience to our customers if we fail to deliver the capabilities required to execute on them.
Our interactions with customers have evolved into an omnichannel experience as they use computers, tablets, mobile phones, and other electronic devices to shop in our stores and online and provide feedback and public commentary about all aspects of our business. Omnichannel and digital retail is quickly evolving, and we must anticipate and meet our customers’ expectations and counteract new developments and technology investments by our competitors. Our customer-facing technology systems must appeal to our customers, function as designed, and provide a consistent customer experience. We also need to collect, use, and share relevant customer data to effectively meet customer expectations of a more personalized experience. Our ability to collect, use, and share such data is subject to a number of external factors, including the impact of legislation or regulations governing data privacy and security, as well as the change of third-party policies restricting data collection, use, and sharing.
The success of our strategic initiatives to adapt our business concept to our customers’ changing shopping habits and demands and changing demographics have required us to, and will continue to require us to, deliver large, complex programs requiring
integrated planning, initiative prioritization, and program sequencing. These initiatives have required, and will continue to require, new competencies in many positions, and our management, associates, and contractors have had to, and will need to continue to, adapt and learn new skills and capabilities. To the extent they are unable or unwilling to make these changes, we may be unable to realize the full benefits of our strategic initiatives and expand our relevant market access. Failure to realize the benefits of amounts we invest in new technologies, products, or services could result in the value of those investments being written down or written off. In addition, to support our strategic initiatives and the related technology investments needed to implement our strategic investments, we must attract and retain a large number of skilled professionals, including technology professionals. The market for these professionals is increasingly competitive. Our results of operations, financial condition, or business prospects could also be adversely affected if we fail to provide a consistent experience for our customers, regardless of sales channel, if our technology systems do not meet our customers’ expectations, if we are unable to counteract new developments and innovations implemented by our competitors, or if we are unable to attract, retain, and manage the talent succession of additional personnel at various levels of the Company who have the skills and capabilities we need to implement our strategic initiatives and drive the changes that are essential to successfully adapting our business concept in the rapidly changing retail environment.
We have many competitors who could take sales and market share from us if we fail to execute our strategic initiatives effectively, or if they develop a substantially more effective or lower cost means of meeting customer needs, resulting in a negative impact on our business and results of operations.
We operate in a highly competitive market for home improvement products and services and have numerous large and small, direct and indirect competitors. The principal competitive factors in our industry include location of stores, product assortment, product pricing, in-stock levels, customer service, and the evolution of technology and customer expectations. We face growing competition from online and omnichannel retailers who have a similar product or service offering. Customers are increasingly able to quickly comparison shop and determine real-time product availability and price using digital tools. We will be at a competitive disadvantage if, over time, our competitors are more effective than us in their utilization and integration of rapidly evolving technologies, including AI and machine learning technologies. Further, online and omnichannel retailers continue to focus on delivery services, as customers are increasingly seeking faster, guaranteed delivery times, including same-day and next-day fulfillment, low-price or free shipping, and convenient pick-up options, and we must make investments to keep up with our customers’ evolving shopping preferences. Our ability to be competitive on delivery times, delivery costs, and delivery options depends on many factors, including successful implementation and the continued maintenance of our initiatives related to supply chain transformation, including our market-based delivery model, and our relationships with third parties providing delivery services. Our failure to respond effectively to competitive pressures and changes in the markets for home improvement products and services could affect our financial performance. Moreover, changes in the promotional pricing and other practices of our competitors, including the effects of competitor liquidation activities, may impact our results.
If we fail to hire, train, manage, and retain qualified associates or corporate support staff with the capabilities of delivering on strategic objectives, our labor costs and results of operations could be negatively impacted.
Our customers expect our associates to be well trained and knowledgeable about the products we sell and the home improvement services we provide. We compete with other retailers for many of our associates, and we are experiencing a competitive labor market with low unemployment. Increasingly, our sales associates must have expanded skill sets. It is important that we attract and retain a qualified workforce that can deliver relevant, competent, and differentiated experiences for a wide variety of culturally diverse customers. Additionally, in order to deliver on the omnichannel expectations of our customers and related strategic objectives, we rely on the specialized training and capabilities of corporate support staff, which are broadly sought after by our competitors. Further, our ability to successfully execute organizational changes, including management transitions within the Company's senior leadership, are critical to our business success. The loss of key executive or senior officers or our failure to adequately plan for succession of senior management personnel could impact our ability to achieve our strategic objectives. If we are unable to hire, train, manage, and retain qualified associates, the quality of service we provide to our customers may decrease and our results of operations could be negatively affected.
Our ability to meet our labor needs, particularly in a competitive labor market, while controlling our costs is subject to a variety of external factors, including wage rates, the availability of and competition for talent, health care and other benefit costs, our brand image and reputation, changing demographics and the adoption of new or revised legislation or regulations governing immigration, employment, labor relations, minimum wage, health care benefits, and family and medical leave. We are subject to upward pressure on associate wages and employer-provided benefits, which in turn increases labor costs. Additionally, many associates are in entry-level or part-time roles with historically higher turnover rates, which leads to increased training and retention costs. Further, we are subject to labor organizing efforts from time to time, and if we become subject to collective bargaining agreements in the future, it could affect how we operate our business. Our response to any organizing efforts could be perceived negatively and harm our business and reputation. In addition to our United States operations, we have support
offices in India and China, and any extended disruption of our operations in our different locations, whether due to labor difficulties or otherwise, could adversely affect our business and results of operations.
Positively and effectively managing our public image and reputation is critical to our business success, and, if our public image and reputation are damaged, it could negatively impact our relationships with our customers, vendors, associates, and shareholders, and consequently, our business and results of operations.
Our public image and reputation are critical to ensuring that our customers shop at Lowe’s, our vendors want to do business with Lowe’s, and our associates want to work for Lowe’s. We must continue to manage, preserve, and grow Lowe’s public image and reputation. Lowe’s actual or perceived position or lack of position on social, environmental, political, public policy, or other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation. In addition, failure to meet our stated environmental and social objectives, and consumer, shareholder, and other stakeholder concerns about our environmental and social practices are potential sources of reputational risk. Vendors and others with whom we do business may affect our reputation. Any negative incident can erode trust and confidence quickly, and adverse publicity about us could damage our reputation and brand image, undermine our customers’ confidence, reduce demand for our products and services, affect our relationships with current and future vendors, impact our results of operations, affect our ability to recruit, retain, and engage our associates, and attract regulatory scrutiny. The significant expansion in the use of social media over recent years has compounded the potential scope of the negative publicity that could be generated by such negative incidents. We have been, and in the future may be, subject to criticism in the media and negative social media campaigns related to certain initiatives, including those related to diversity and inclusion, and changes in those initiatives. Widespread dissemination of such criticism at times may adversely impact our relationships with our associates, customers, shareholders, and other stakeholders. In addition, the use of social media platforms and other technologies has increased the speed and accessibility of information dissemination and given users the ability to more effectively organize collective actions such as boycotts and other actions.
Additionally, our proprietary rights in our trademarks, trade names, service marks, domain names, copyrights, patents, trade secrets, and other intellectual property rights are valuable assets of our business. We may not be able to prevent or even discover every instance of unauthorized third-party uses of our intellectual property or dilution of our brand names, such as when a third party uses trademarks that are identical or similar to our own. If we are unable to successfully protect our intellectual property rights, our business could be adversely affected.
Failure to achieve and maintain a high level of product and service quality could damage our image with customers, expose us to litigation and negatively impact our sales, profitability, cash flows, and financial condition.
Product and service quality issues could result in a negative impact on customer confidence in Lowe’s and our brand image. If our product and service offerings do not meet applicable safety standards or our customers’ expectations regarding safety or quality, we could experience lost sales and increased costs and be exposed to legal, financial, and reputational risks. As a result, Lowe’s reputation as a retailer of high-quality products and services, including both national and Lowe’s private brands, could suffer and impact customer loyalty. Additionally, we and our customers have expectations on responsible sourcing and compliance with applicable laws and regulations. Under our Vendor Code of Conduct, our vendors are required to meet our expectations across multiple areas of compliance, including health and safety, environmental standards, compensation, hours of work, and prohibitions on child and forced labor. Where appropriate, we request that our vendors provide additional documentation proving their compliance in these areas. If we need to seek alternative sources of supply from vendors with whom we have less familiarity, the risk of our standards not being met may increase. Actual, potential, or perceived product safety concerns or vendor non-compliance exposes us to litigation, as well as government enforcement action, and could, and in certain instances in the past has, resulted in costly product recalls, the inability to sell certain products due to customs actions, including regulatory enforcement inquiries, holds, detentions, and exclusions, and other liabilities.
Our sales and profitability depend on our ability to maintain our store base and maintain appropriate levels of inventory and failure to do so may affect our business, financial condition and result of operations.
We have a store base that requires maintenance, investment, and space reallocation initiatives to deliver the shopping experience that our customers desire. Our capital investments in our stores may not deliver the convenience or relevant shopping experience our customers expect. It is important that we maintain appropriate levels of inventory in our stores and supply chain facilities and respond to changing customer demands. We must also maintain a safe store environment for our customers and associates, as well as to protect against loss or theft of our inventory (known as “shrink”). Higher rates of shrink, which we have experienced from time to time, including as a result of organized retail crime, can require operational changes that may increase costs and adversely impact customer and associate experience.
Supply Chain and Third-Party Risks
Disruptions in our supply chain and our fulfillment network for our products due to various factors including, but not limited to, global health crises, geopolitical conflicts, trade policy changes, and additional tariffs, have affected and may continue to affect our business and results of operations.
We source, stock, and sell products from domestic and international vendors, and their ability to reliably and efficiently fulfill our orders is critical to our business success. Catastrophic events, extreme weather conditions, public health crises, and global economic and political conditions may adversely affect our global supply chain. For example, impacts related to the COVID-19 pandemic placed strains on the domestic and international supply chain, which negatively affected the flow and availability of our products in the past, due to difficulties in timely obtaining products from the manufacturers and suppliers of our products.
We source, both directly and indirectly, a portion of the products we sell from foreign manufacturers, with China and Mexico being the dominant import sources. Tax and trade policies, tariffs, and other regulations affecting trade between the United States and other countries, such as China and Mexico, increase the cost of our merchandise sourced from outside of the United States, which represents a large percentage of our private branded and national brand merchandise. It remains unclear how tax or trade policies, tariffs, customs actions, or trade relations may evolve in the future, which could adversely affect our business, results of operations, effective income tax rate, liquidity, and net income. In addition, other countries have responded by changing their business and trade policies in anticipation of or in response to increased import tariffs and other changes in U.S. trade policy and regulations already enacted or that may be enacted in the future. Complications in the free movement of goods in North America, an escalation of tariff activity elsewhere in the world or changes to existing free trade agreements, like the United States-Mexico-Canada Agreement (USMCA), could adversely impact our financial results. Increased import tariffs and other changes in trade policy could also negatively impact consumer demand for the products we sell. In addition to the potential direct impacts of increased tariff activity, longer term macroeconomic consequences could result, including slower growth, inflation, and higher interest rates. The degree of our exposure is dependent on, among other things, the type of goods, rates imposed, and timing of tariffs. The impact to our business, including net sales and gross margin, will be influenced in part by merchandising and pricing strategies in response to potential cost increases by us and our competitors. While these potential impacts are uncertain, they could have an adverse impact on our financial results.
Financial instability among key vendors, political instability, geopolitical or armed conflicts, and labor unrest in source countries or elsewhere in our supply chain, changes in the total costs in our supply chain (including fuel), labor costs or labor shortages among our vendors, port labor disputes and security, the outbreak of pandemics, weather-related events, natural disasters, work stoppages, shipping capacity restraints, shipping delays and disruptions, changes in trade policy, retaliatory trade restrictions imposed by either the United States or a major source country, tariffs or duties, customs actions, including regulatory enforcement inquiries, holds, detentions, and exclusions, fluctuations in transport availability, capacity, and costs are beyond our control and could negatively impact our business if they seriously disrupted the movement of products through our supply chain or increased their costs. In recent years, U.S. ports have been impacted by capacity constraints, port congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters.
Additionally, as we add fulfillment capabilities or pursue strategies with different fulfillment requirements, our fulfillment network becomes increasingly complex and operating it becomes more challenging. If our fulfillment network does not operate properly or if a vendor fails to deliver on its commitments, we experience delays in inventory, increased delivery costs, or merchandise out-of-stocks that could lead to lost sales and decreased customer confidence, and adversely affect our results of operations.
The execution of initiatives to transform our supply chain network could disrupt our operations in the near term, and these investments might not provide the anticipated benefits.
We continue to transform and expand our supply chain network and existing omnichannel capabilities to meet changing customer needs. These investments are designed to promote greater network capacity and better flow management and optimization while leveraging a market delivery model. Failure to choose the right investments and implement them in the right manner and at the right pace could disrupt our operations. If we are unable to effectively manage the volume, timing, nature, location, and cost of these investments, projects, and changes, our business operations and financial results could be materially and adversely affected. The cost and potential problems, defects of design, and interruptions associated with the implementation of these initiatives, including those associated with implementing new technologies, restructuring support systems and processes, securing appropriate facility locations, addressing impacts on inventory levels, and managing third-party service providers, could disrupt or reduce the efficiency of our operations and impact our profitability. Our investments to enhance and expand our supply chain might not provide the anticipated benefits, or might take longer than expected to complete or realize anticipated benefits, or might fail altogether, each of which could adversely impact our competitive position and our financial condition, results of operations, or cash flows.
Our inability to effectively and efficiently manage and maintain our relationships with selected suppliers of both national brand and private branded products could negatively impact our business operations and financial results.
We form strategic relationships, some of which are exclusive, with selected suppliers to market and develop products under a variety of recognized and respected national brand names. We also have relationships with certain suppliers to enable us to sell private branded products which differentiate us from other retailers. The inability to effectively and efficiently manage and maintain our relationships with these suppliers could negatively impact our business operations and financial results.
Failure of a key vendor or service provider that we cannot quickly replace could disrupt our operations and negatively impact our business, financial condition, and results of operations.
We rely upon a number of vendors as the sole or primary source of some of the products we sell. We also rely upon many independent service providers for technology solutions and other services that are important to many aspects of our business. Many of these vendors and service providers have certain products or specialized skills needed to support our business concept and our strategies. If these vendors or service providers discontinue operations or are unable to perform as expected, or if we fail to manage them properly or we are unable to replace them quickly, our business could be adversely affected, at least temporarily, until we are able to replace them.
Failures relating to our third-party installer program or by our third-party installers have resulted in and could result in increased operational and legal risks and negatively impact our business, financial condition and results of operations.
We contract with third-party installers to provide installation services to our customers, and, as the general contractor, we are subject to regulatory requirements and risks applicable to general contractors, including certain licensing and permitting requirements, and those relating to the quality and performance of our third-party installers. We have faced investigations by one or more government agencies relating to our compliance with applicable laws and regulations, including an investigation with respect to whether we are in compliance with applicable recordkeeping requirements and lead-safe practices. Any adverse result following such investigations could negatively affect our operations. In addition, failures by us or our third-party installers to effectively manage such requirements and internal processes regarding installation services have, from time to time, resulted in, and in the future could result in lost sales, fines, and lawsuits, as well as damage to our reputation, and may result in the loss of our general contractor licenses, which could negatively affect our business.
Technology and Cybersecurity Risks
Our financial performance could be adversely affected if our information systems or the information systems of third-party vendors are seriously disrupted or we fail to properly maintain, improve, upgrade, and expand those systems.
Our efforts to provide an omnichannel experience for our customers include investing in, maintaining, and making ongoing improvements of our existing information systems that support operations, such as sales, inventory replenishment, merchandise ordering, project design and execution, transportation, receipt processing and fulfillment. We also engage third-party vendors for a variety of reasons, including for digital storage technology and content delivery. Such vendors may have access to information about our customers, associates, or vendors. Our systems and the systems of third-party vendors are subject to damage or interruption as a result of catastrophic events, power outages, viruses, malicious attacks, and telecommunications failures, or other vulnerabilities and irregularities, and as a result we may incur significant expense, data loss, as well as an erosion of customer confidence.
Additionally, we continually make investments in our systems which may introduce disruption. In particular, the Company is undergoing a multi-year technology transformation which includes updating and modernizing our merchandise selling system, as well as certain accounting and finance systems. We may not be able to achieve the anticipated benefits of these investments and may experience operational challenges such as delays or errors in implementation, security failures such as loss or corruption of data, reputational harm, increased costs and other significant disruptions. Our financial performance could be adversely affected if our information systems are seriously disrupted or we fail to properly maintain, improve, upgrade, and expand those systems.
The failure of customer-facing technology systems to perform effectively and reliably could keep us from delivering positive customer experiences.
Access to the Internet from computers, tablets, smartphones and other mobile communication devices has empowered our customers and changed the way they shop and how we interact with them. Our websites, primarily Lowes.com, are a sales channel for our products, and are also a method of making product, project, and other relevant information available to our customers that impacts our in-store sales. Additionally, we have other affiliated websites and mobile apps through which we seek to inspire, inform, cross-sell, establish online communities among, and otherwise interact with, our customers, including
through online visualization and configuration tools. Performance issues with these customer-facing technology systems, including temporary outages caused by distributed denial of service, ransomware, or other cyber-attacks, or a complete failure of one or more of them without a disaster recovery plan that can be quickly implemented, could quickly destroy the positive benefits they provide to our home improvement business and negatively affect our customers’ perceptions of Lowe’s as a reliable online vendor and source of information about home improvement products and services.
Our business, reputation, results of operations, and financial condition could be adversely affected by cybersecurity incidents and the failure to protect customer, associate, vendor, or Company information or to comply with evolving regulations relating to our obligation to protect our systems, assets, and such information.
Cyber-attacks and tactics designed to gain access to and exploit sensitive information by breaching mission critical systems of large organizations are constantly evolving, and high profile security breaches leading to unauthorized release of sensitive customer information have occurred in recent years with increasing frequency at a number of major U.S. companies, including several large retailers, despite widespread recognition of the cyber-attack threat and improved data protection methods.
As with many other retailers, we collect, process, transmit, store, and delete certain personal information about our customers, associates, and vendors, as well as confidential, sensitive, proprietary and business, personal and payment card information. Additionally, we use third-party service providers for certain services, such as authentication, content delivery, back-office support, fraud prevention, order and service fulfillment, supply chain management, customer service, workforce management, and other functions, and we provide such third-party service providers with personal and other confidential information necessary for the services concerned.
In the normal course of business, we and our third-party service providers have in the past and will likely continue to experience cybersecurity threats and incidents, and certain of our third-party service providers have been subject to disruption due to ransomware and other cyber-attacks. Although, we do not believe such cybersecurity threats or incidents have had a material impact on us to date, there is no guarantee that a future cybersecurity threat or incident will be detected and remediated to not have a material adverse impact on our business strategy, reputation, results of operations, or financial condition. It can be difficult to preempt or detect ever-evolving forms of cyber-attacks, and we and our third-party service providers may not be able to adequately anticipate or prevent a future breach in our or their systems that results in the unauthorized access to, destruction, misuse, or release of personal information or other sensitive data. The increased levels of remote access to our information systems and the continued use of remote work infrastructure has further increased the possible attack surfaces, and we are exposed to increased risk to the security of our information systems or the information systems of third-party vendors and the confidentiality, integrity, and availability of our data.
A ransomware attack could prevent us or our third-party service providers from accessing data or systems that support Lowe’s operations. Our information security or our service providers’ information security may also be compromised because of human errors or acts, including by associates, or system errors. Our systems and our service providers’ systems are additionally vulnerable to a number of other causes, such as critical infrastructure outages, computer viruses, technology system failures, catastrophic events or cyber-attacks, including the use of malicious codes, worms, phishing, and ransomware. In the event that our systems are breached or damaged for any reason, we may also suffer loss or unavailability of data and interruptions to our business operations while such breach or damage is being remedied. Should these events occur, the unauthorized disclosure, loss, or unavailability of data and disruption to our business may have a material adverse effect on our reputation, drive existing and potential customers away and lead to financial losses from remedial actions, or potential liability, including possible litigation and punitive damages. A security breach resulting in the unauthorized release of data from our information systems or our third-party service providers’ information systems would also materially increase the costs we already incur to protect against such risks and require dedication of substantial resources to manage the aftermath of such a breach. We maintain cybersecurity insurance coverage although such insurance may be insufficient to compensate us for losses that may occur or may not cover certain cyber incidents. Additionally, the rapid evolution of AI and machine learning technologies and the implementation of pilot programs integrating generative AI into our internal and customer-facing systems may intensify our cybersecurity risks and create new risks to our business, operations, and financial condition.
Data privacy and cybersecurity laws are constantly changing, and the implementation of these laws has become more complex. In order to maintain our compliance with such laws as they come to fruition, we may sustain increased costs and change our business policies and processes in order to adapt to new requirements that are or become applicable to us. As the regulatory environment relating to retailers’ and other companies’ obligation to protect personal information becomes stricter, a material failure on our part to comply with applicable regulations could subject us to fines, other regulatory sanctions, or government investigation, and potentially to lawsuits brought by private individuals, regulators or states’ attorney general. Such violation or perceived violation of privacy, including improper collection, use of sharing of personal information, or failure to sufficiently disclose privacy practice, can adversely affect the trust that customers, associates, and business partners have in us related to their personal information.
See Item 1C of this Form 10-K, “Cybersecurity,” for more information on our cybersecurity risk management and governance.
We are subject to payments-related risks that could increase our operating costs, expose us to fraud, subject us to potential liability and potentially disrupt our business.
We accept payments using a variety of methods, including credit cards, debit cards, credit accounts, our private label and co-branded credit cards, trade credit, mobile and electronic payments, gift cards, cash, consumer invoicing and physical bank checks, and we may offer different payment options over time. These payment options subject us to many compliance requirements, including, but not limited to, compliance with payment card association operating rules, including data security rules, certification requirements, rules governing electronic funds transfers and Payment Card Industry Data Security Standards. They also subject us to potential fraud by criminal elements seeking to discover and take advantage of security vulnerabilities that may exist in some of these payment systems. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs. Additionally, we rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, electronic checks, gift cards, promotional financing, and other forms of electronic payment, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. National outages with our third-party credit and debit processor have resulted in lost sales and declined transactions after purchases. Future occurrences of such failures in third party systems are difficult to predict and may adversely affect our operations in unexpected ways.
Our growing use of AI and machine learning may present additional risks, including risks associated with algorithm development or use, the tools and data sets used and/or a complex, developing regulatory environment.
We currently leverage internally developed and third-party developed AI, including both predictive and generative AI-powered solutions, to facilitate a more efficient operation of our business and to enhance the experience of our customers. We have developed an AI framework designed to enhance the customer experience and unlock productivity across three pillars - how we sell, how we shop, and how we work. We use AI-powered solutions designed to enable quick and personalized customer interactions, design assistance platforms, and tools for better forecasting, sourcing, inventory planning, and faster fulfillment. We face risk of competitive disadvantage if our competitors more effectively use AI to better serve customers, drive internal efficiencies, and create new or enhanced products or services. Additionally, we are making investments to expand our AI capabilities in our business, including ongoing deployment and improvement of existing machine learning and AI technologies, as well as developing new features using AI technologies. We anticipate increased investments in the future to improve our use of AI, however, there can be no assurance that the development or usage of, or our investments in, AI will always enhance our products or services or be beneficial to our business. Further, the rapidly evolving legal and regulatory environment relating to AI and privacy could impact our implementation of AI technology and increase compliance costs and the risk of non-compliance. Flaws, breaches, or malfunctions in these systems could lead to operational disruptions, data loss, erroneous decision-making, regulatory scrutiny, reputational harm, or legal liability.
Investment-Related Risks
Our strategic transactions involve risks, and we may not realize the expected benefits because of numerous uncertainties and risks.
We regularly consider and enter into strategic transactions, including mergers, acquisitions, joint ventures, investments and other growth, market and geographic expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies, and other various benefits. Our ability to deliver the expected benefits from any strategic transaction is subject to numerous uncertainties and risks, including our ability to integrate personnel, labor models, financial, IT and other systems successfully; disruption of our ongoing business and distraction of management; hiring additional management and other critical personnel; and increasing the scope, geographic diversity, and complexity of our operations. Effective internal controls are necessary to provide reliable and accurate financial reports, and the integration of businesses may create complexity in our financial systems and internal controls and make them more difficult to manage. Integration of businesses into our internal control system could cause us to fail to meet our financial reporting obligations. Additionally, we have recognized material impairments in the past and may do so in the future, including in connection with assets we have acquired or divested in a strategic transaction or charges to earnings associated with any strategic transaction, which have and may in the future materially reduce our earnings. Our shareholders may react unfavorably to our strategic transactions and strategic transactions may also be subject to regulatory uncertainty due to the changing enforcement landscape. We may not
realize the anticipated benefits from such transactions, we may be exposed to additional liabilities of any acquired business or joint venture, and we may be exposed to litigation in connection with the strategic transaction. Further, we may finance these strategic transactions by incurring additional debt, which could increase leverage or impact our ability to access capital in the future.
Legal, Regulatory and Other External Risks
Our sales are dependent upon the health and stability of the general economy. Adverse changes in macroeconomic factors specific to the home improvement industry have in the past and may in the future negatively impact the rate of growth of our total sales and comparable sales.
Many macroeconomic factors have in the past and may in the future adversely affect our financial performance. These include, but are not limited to, periods of slow economic growth or recession, home price appreciation or decreasing housing turnover, age of housing stock, volatility and/or lack of liquidity from time to time in U.S. and world financial markets and the consequent reduced availability and/or higher cost of borrowing to Lowe’s and its customers, slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending, inflation and its impacts on discretionary spending and on our costs, shortages, and other disruptions in the labor supply, the impact of rising interest rates, consumer debt levels, changes in tax rates and policy, outbreak of pandemics, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural disasters, geopolitical or armed conflicts, and acts of both domestic and international terrorism. Additionally, in fiscal 2024, we continued to operate in an environment with inflationary pressures and higher interest rates, which has adversely impacted consumer discretionary spending. If cost inflation of merchandise increases beyond our ability to control or respond effectively, we may not be able to adjust prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand. Sales of many of our product categories and services are driven by the activity level of home improvement projects. Adverse development in these factors could result in a decrease in home improvement activity which could reduce demand for our products and services.
Our business has been and could continue to be affected by uncharacteristic or significant weather conditions, as well as other catastrophic events, which could impact our operations.
Natural disasters, such as hurricanes and tropical storms, fires, floods, tornadoes, and earthquakes; unseasonable, or unexpected or extreme weather conditions, such as major or extended winter storms or droughts, whether as a result of climate change or otherwise; severe changes in climate; pandemics and public health concerns; acts of terrorism or violence, including active shooter situations; civil unrest; or similar disruptions and catastrophic events could have, and in certain instances in the past had, an adverse effect on our operations or financial performance. These events can affect consumer spending and confidence and consumers’ disposable income, particularly with respect to home improvement or construction projects, and could have an adverse effect on our financial performance. Natural disasters or catastrophic climate events may, and in certain instances in the past has, increased demand for certain of our products, and if we are unable to meet such customer demands, our reputation, business, and financial operations could be harmed, particularly if our responses to such events are less adequate than those of our competitors. These types of events can also adversely affect our workforce and prevent associates and customers from reaching our stores and other facilities. They can also disrupt or disable operations of stores, support centers, and portions of our supply chain and distribution network, including causing reductions in the availability of inventory and disruption of utility services. In addition, these events may affect our information systems, resulting in disruption to various aspects of our operations, including our ability to transact with customers and fulfill orders and to communicate with our stores. Unseasonable, unexpected or extreme weather conditions such as excessive precipitation, warm temperatures during the winter season, or prolonged or extreme periods of warm or cold temperatures, could render a portion of our inventory damaged or unsellable. As a consequence of these or other catastrophic or uncharacteristic events, we may experience interruption to our operations, increased costs, or losses of property, equipment or inventory, which would adversely affect our revenue and profitability.
Our business and operations are subject to risks related to the long-term effects of global climate change.
Our business and operations are subject to climate-related risks. These include both physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory or technology changes), which are expected to be widespread and unpredictable. Climate change, extreme weather conditions, wildfires, droughts, and rising sea levels may impact the areas in which the Company’s operations and facilities are located, and they could also affect our ability to procure commodities at costs and in quantities we currently experience. Such events could result in an increase in our costs and expenses and harm our future revenue, cash flows, and financial performance. Government regulations limiting carbon dioxide and other greenhouse gas emissions may increase compliance and merchandise costs, and other regulations affecting energy inputs could materially affect our profitability. In addition, we use natural gas, diesel fuel, gasoline and electricity in our operations, all of which could face increased regulation as a result of climate change or other environmental concerns.
Our costs of doing business could increase as a result of changes in, expanded enforcement of, or adoption of new federal, state or local laws and regulations.
Our business is subject to a wide array of federal, state, and local laws and regulations. In recent years, a number of new laws and regulations have been adopted, and there has been expanded enforcement of certain existing laws and regulations by federal, state, and local agencies. These laws and regulations, and related interpretations and enforcement activity, may change as a result of a variety of factors, including political, economic, or social events. Changes in, expanded enforcement of, or adoption of new federal, state or local laws and regulations governing minimum wage requirements, collective bargaining, the classification of exempt and non-exempt employees, the distinction between employees and contractors, other wage, labor or workplace regulations, health care, data privacy and cybersecurity, the sale and pricing of some of our products, transportation, logistics, international trade, responsible sourcing, supply chain transparency, taxes, unclaimed property, sustainability, the environment and climate change, including energy costs and consumption, could increase our costs of doing business or impact our operations. In addition, if we fail to comply with other applicable laws and regulations, including the Foreign Corrupt Practices Act and local anti-bribery laws, we could be subject to reputational and legal risks, including government enforcement action and class action civil litigation, which could adversely affect our business, financial condition, and results of operations.
Future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements, negatively affecting our business, financial condition, and results of operations.
We are, and in the future will become, involved in lawsuits, including consumer, commercial, employment, tort and other litigation, regulatory inquiries, and governmental and other legal proceedings arising out of the ordinary course of our business. Some of these proceedings raise difficult and complicated factual and legal issues and are subject to uncertainties and complexities. The timing of the final resolutions to lawsuits, regulatory inquiries and governmental and other legal proceedings is typically uncertain. Additionally, the possible outcomes of, or resolutions to, these proceedings could include adverse judgments or settlements, either of which could require substantial payments. Furthermore, defending against these proceedings may require a diversion of management’s attention and resources. None of the legal proceedings in which we are currently involved, individually or collectively, are considered material.
The inflation or deflation of commodity and other prices could affect our prices, demand for our products, and our sales.
Prices of certain commodity products, including lumber, copper, energy, and other raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, inflationary pressures, labor costs, competition, market speculation, government regulations, tariffs and trade restrictions, and periodic delays in delivery. Rapid and significant changes in commodity and other prices, such as changes in lumber prices, and our ability to pass them on to our customers or manage them through our portfolio strategy, have affected, and may continue to affect, the demand for our products and our sales.
Tax matters could adversely affect our results of operations and financial conditions.
We may be affected by higher rates of federal, state, or local tax imposed as a result of political developments or economic conditions, which could affect our effective tax rate. Our effective tax rate and future tax liability could be adversely affected by regulatory and legal changes, the results of tax audits and examinations, disallowed tax strategies, and changes in accounting principles and interpretations relating to tax matters, all of which could negatively impact our business. Changes in tax laws and regulations that impact our customers and counterparties or the economy generally could also impact our financial condition and results of operations.
Liquidity and access to capital rely on efficient, rational, and open capital markets and are dependent on our credit strength. Our inability to access capital markets could negatively affect our business, financial performance, and results of operations.
We rely on cash flows from operations, as well as continued access to capital markets on both a short-term and long-term basis, as needed, to fund our operations, make strategic investments to support long-term growth, return excess cash to shareholders in the form of dividends and share repurchases, and repay debt maturities as they become due. Our access to capital markets depends on our strong credit ratings, the overall condition of such capital markets and our operating performance. If rating agencies lower or place our credit ratings on a credit watch, or if we experience a deterioration of certain financial ratios, it could adversely affect our ability to access the public debt markets and our cost of funds. Each of the credit rating agencies reviews its ratings periodically, and there is no guarantee that our current credit ratings will remain the same. Disruption in the financial markets, including as a result of rising interest rates, bank failures or other macroeconomic conditions, or an erosion of our credit strength or declines on our credit rating could impact negatively our ability to meet capital requirements or fund working capital needs.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B - Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
Item 2 - Properties
As of January 31, 2025, our properties consisted of 1,748 stores and outlets in the United States with a total of approximately 195 million square feet of selling space. A summary of our stores is as follows:
State Stores State Stores
Alabama 39 Montana 5
Alaska 5 Nebraska 5
Arizona 32 Nevada 17
Arkansas 21 New Hampshire 13
California 112 New Jersey 40
Colorado 29 New Mexico 14
Connecticut 17 New York 70
Delaware 10 North Carolina 115
District of Columbia 1 North Dakota 3
Florida 132 Ohio 84
Georgia 64 Oklahoma 29
Hawaii 4 Oregon 14
Idaho 8 Pennsylvania 83
Illinois 37 Rhode Island 5
Indiana 43 South Carolina 51
Iowa 11 South Dakota 3
Kansas 12 Tennessee 60
Kentucky 42 Texas 144
Louisiana 30 Utah 17
Maine 11 Vermont 2
Maryland 29 Virginia 69
Massachusetts 28 Washington 35
Michigan 45 West Virginia 18
Minnesota 10 Wisconsin 8
Mississippi 24 Wyoming 1
Missouri 47 Total 1,748
Of the total stores operating as of January 31, 2025, approximately 89% are owned, which includes stores on leased land, with the remainder being leased from third parties. We also operate several facilities to support distribution and fulfillment, as well as data centers and various support offices. Our executive offices are located in Mooresville, North Carolina.

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ITEM 3. LEGAL PROCEEDINGS
Item 3 - Legal Proceedings
The Company is from time to time a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business. With respect to such lawsuits, claims, and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company applies a threshold of $1,000,000 for purposes of disclosing environmental proceedings involving a governmental authority, if any, under this Item 3. The Company does not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on its results of operations, financial position, or cash flows. The Company maintains liability insurance for certain risks that are subject to certain self-insurance limits.
The U.S. Attorney’s Office for the Central District of California and the U.S. EPA’s Region 9 Office have been conducting an investigation with respect to whether the Company and independent contractors who performed installations under the Company’s third-party installer program complied with applicable recordkeeping requirements and lead-safe practices under the Toxic Substances Control Act, the EPA’s Lead Renovation, Repair and Painting Rules, and with an EPA civil consent
decree that the Company entered into in 2014 in the context of projects in homes constructed before 1978. In the third quarter of fiscal 2023, the EPA’s Region 5 and other EPA and U.S. Department of Justice representatives informed the Company that they have identified possible deviations from the consent decree. While we cannot predict the ultimate outcomes of these matters, we do not expect them to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4 - Mine Safety Disclosures
Not applicable.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Set forth below is a list of names and ages of the executive officers of the registrant indicating all positions and offices with the registrant held by each such person and each person’s principal occupations or employment during the past five years unless otherwise noted. Each executive officer of the registrant is elected by the Board of Directors. Each executive officer of the registrant holds office from the date of election until a successor is elected or until his or her death, resignation or removal.
Name Age Title
Marvin R. Ellison 60 Chairman, President and Chief Executive Officer since May 2021; President and Chief Executive Officer, July 2018 - May 2021; Chairman of the Board and Chief Executive Officer, J.C. Penney Company, Inc. (a department store retailer), 2016 - May 2018; Chief Executive Officer, J.C. Penney Company, Inc., 2015 - 2016; President, J.C. Penney Company, Inc., 2014 - 2015; Executive Vice President - U.S. Stores, The Home Depot, Inc. (a home improvement retailer) 2008 - 2014.
William P. Boltz 62 Executive Vice President, Merchandising since August 2018; President and CEO, Chervon North America (a global power tool supplier), 2015 - 2018; President and owner of The Boltz Group, LLC (a retail consulting firm), 2013 - 2015; Senior Vice President, Merchandising, The Home Depot, Inc. (a home improvement retailer), 2010 - 2012; Vice President, Merchandising, The Home Depot, Inc., 2006 - 2010.
Janice M. Dupré 60 Executive Vice President, Human Resources since June 2020; Senior Vice President, Talent Management & Diversity and Global Chief Diversity Officer, January 2020 - June 2020; Vice President, Leadership Development and Global Chief Diversity Officer, November 2017 - January 2020; Vice President of Diversity & Inclusion and Chief Diversity Officer, McKesson Corporation (a healthcare company), June 2015 - October 2017.
Seemantini Godbole 55 Executive Vice President, Chief Digital and Information Officer since September 2022; Executive Vice President, Chief Information Officer, November 2018 - September 2022; Senior Vice President, Digital and Marketing Technology, Target Corporation (a department store retailer), January 2017 - November 2018; Vice President, Digital and Marketing Technology, Target Corporation, 2013 - December 2016.
Joseph M. McFarland III 55 Executive Vice President, Stores since August 2018; Executive Vice President, Chief Customer Officer, J.C. Penney Company, Inc. (a department store retailer), March 2018 - August 2018; Executive Vice President, Stores, J.C. Penney Company, Inc., 2016 - March 2018; Divisional President, The Home Depot, Inc. (a home improvement retailer), 2007 - 2015.
Juliette W. Pryor 60 Executive Vice President, Chief Legal Officer and Corporate Secretary since March 2024; Executive Vice President, Chief Legal Officer, Chief Compliance Officer and Corporate Secretary, May 2023 - March 2024; Executive Vice President, General Counsel and Corporate Secretary, Albertsons Companies, Inc. (a food and drug retail company), June 2020 - May 2023; Senior Vice President, General Counsel and Corporate Secretary, Cox Enterprises, Inc. (a multi-industry communications and automotive services company), October 2016 - June 2020; Executive Vice President, General Counsel and Chief Compliance Officer, US Foods, Inc. (a food service distribution company), February 2009 - October 2016.
Brandon J. Sink 47 Executive Vice President, Chief Financial Officer since April 2022; Senior Vice President, Retail Finance, March 2021 - April 2022; Vice President, Merchandising Finance, June 2019 - March 2021; Vice President, Enterprise Strategy, August 2018 - June 2019; Vice President, Finance, September 2016 - August 2018; Vice President, Corporate Controller, July 2015 - September 2016.
Margrethe R. Vagell 47 Executive Vice President, Supply Chain since March 2024; Senior Vice President, Supply Chain, January 2024 - March 2024; Senior Vice President, General Merchandising Manager, June 2019 - January 2024; Senior Vice President, Store Merchandising, September 2018 - June 2019; Vice President, Chief Customer Officer Operations, July 2017 - September 2018; Vice President, Enterprise Analytics, November 2015 - July 2017; Vice President, Pricing and Promotions, October 2014 - November 2015.
Quonta D. Vance 51 Executive Vice President, Pro and Home Services since June 2023; Senior Vice President, Transportation and Final Mile, November 2022 - June 2023; Senior Vice President, General Merchandising Manager, January 2021 - November 2022; Division President, May 2019 - January 2021; Regional Vice President, The Home Depot, Inc. (a home improvement retailer), February 2001 - May 2018.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Lowe’s common stock is traded on the New York Stock Exchange (NYSE). The ticker symbol for Lowe’s is “LOW”. As of March 20, 2025, there were 19,786 holders of record of Lowe’s common stock.
Total Return to Shareholders
The following information in Item 5 of this Annual Report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into such a filing.
The following table and graph compare the total returns (assuming reinvestment of dividends) of the Company’s common stock, the S&P 500 Index (S&P 500) and the S&P Retailing Industry Group Index (S&P Retail Index). The graph assumes $100 invested on January 31, 2020, in the Company’s common stock and each of the indices.
1/31/2020 1/29/2021 1/28/2022 2/3/2023 2/2/2024 1/31/2025
Lowe’s $ 100.00 $ 145.94 $ 208.44 $ 195.43 $ 202.79 $ 244.70
S&P 500 100.00 117.23 141.84 134.58 163.95 202.41
S&P Retail Index 100.00 141.39 149.72 126.69 174.14 227.91
Issuer Purchases of Equity Securities
The following table sets forth information with respect to purchases of the Company’s common stock made during the fourth quarter of fiscal 2024:
Total Number of
Shares Purchased1
Average Price
Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs2
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs2, 3
November 2, 2024 - November 29, 20244
1,408,924 $ 258.41 1,408,481 $ 11,721,027,386
November 30, 2024 - January 3, 20254
808,207 247.92 806,759 11,521,039,437
January 4, 2025 - January 31, 2025 3,247,993 257.41 3,247,535 10,786,142,988
As of January 31, 2025 5,465,124 $ 256.26 5,462,775 $ 10,786,142,988
1 The total number of shares purchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.
2 On December 7, 2022, the Company announced that its Board of Directors authorized an additional $15.0 billion of share repurchases with no expiration.
3 Excludes excise tax on share repurchases in excess of issuances, which is recognized as part of the cost basis of the shares acquired in the consolidated statements of shareholders’ deficit.
4 In November 2024, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase the Company’s common stock. At inception, pursuant to the ASR agreement, the Company paid $400 million to the financial institution and received an initial delivery of 1.2 million shares. In January 2025, the Company finalized the transaction and received an additional 0.4 million shares. The average price paid per share in settlement of the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note 9 to the consolidated financial statements included herein for additional information regarding share repurchases.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6 - Reserved
Not applicable.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources during the two-year period ended January 31, 2025 (our fiscal years 2024 and 2023). Unless otherwise noted, all references herein for the years 2024, 2023, and 2022 represent the fiscal years ended January 31, 2025, February 2, 2024, and February 3, 2023, respectively. Fiscal years 2024 and 2023 contained 52 weeks of operating results compared to fiscal year 2022, which contained 53 weeks. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. This discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included in this Annual Report that have been prepared in accordance with accounting principles generally accepted in the United States of America. This discussion and analysis is presented in four sections:
•Executive Overview
•Operations
•Financial Condition, Liquidity and Capital Resources
•Critical Accounting Policies and Estimates
EXECUTIVE OVERVIEW
The following table highlights our annual financial results:
(in millions, except per share data)
2024 2023 20221
Net sales
$ 83,674 $ 86,377 $ 97,059
Net earnings
6,957 7,726 6,437
Diluted earnings per share
$ 12.23 $ 13.20 $ 10.17
Net cash provided by operating activities
$ 9,625 $ 8,140 $ 8,589
Capital expenditures
1,927 1,964 1,829
Repurchases of common stock2
3,929 6,334 14,128
Cash dividend payments
2,566 2,531 2,370
1 The fiscal year ended February 3, 2023 had 53 weeks. The fiscal years ended January 31, 2025 and February 2, 2024 had 52 weeks.
2 Repurchases of common stock on a trade-date basis.
Net sales for fiscal 2024 decreased 3.1% from fiscal 2023 to $83.7 billion. Comparable sales for fiscal 2024 decreased 2.7%, consisting of a 3.0% decrease in comparable customer transactions, and a 0.3% increase in comparable average ticket. Net earnings for fiscal 2024 decreased 10.0% to $7.0 billion. Diluted earnings per common share decreased 7.4% in fiscal 2024 to $12.23 from $13.20 in fiscal 2023. Included in fiscal 2024 results is pre-tax income of $177 million associated with the fiscal 2022 sale of the Canadian retail business, which increased diluted earnings per share by $0.24. Included in the fiscal 2023 results is $63 million of pre-tax income associated with the sale of the Canadian retail business, which increased diluted earnings per share by $0.11 in fiscal year 2023. Adjusting for these items, adjusted diluted earnings per common share decreased 8.4% to $11.99 in 2024 from adjusted diluted earnings per common share of $13.09 in 2023 (see the non-GAAP financial measures discussion).
For fiscal 2024, cash flows from operating activities were $9.6 billion, with $1.9 billion used for capital expenditures. Continuing to deliver on our commitment to return excess cash to shareholders, the Company repurchased $3.9 billion of common stock and paid $2.6 billion in dividends during the year.
Macroeconomic factors, such as ongoing inflation and higher interest rates resulting in depressed levels of housing turnover, continued to exert downward pressure on big-ticket DIY discretionary spending in fiscal 2024. Despite these factors, we generated positive Pro customer comparable sales and increased Pro penetration for the year. This is the result of our cumulative investments in the right brands and products, greater inventory depth, improved job site delivery, dedicated service levels, and the Pro customer digital experience. In addition, our strong online performance gives us confidence that our focus on an intuitive user experience and omnichannel fulfillment capabilities, specifically more same-day delivery options and an improved Buy Online Pickup in Store experience, are resonating with our customers.
Looking Forward
The core demand drivers of our business that we track remain unchanged: disposable personal income, home price appreciation, and the age of the housing stock. We believe these drivers will sustain long-term demand as homeowners invest in repairs and upgrades. Trends such as millennial household formation, the elderly preference to age in place, and the persistence of remote work also support home improvement market demand. While these demand drivers remain supportive, broader market uncertainties also exist around tariffs, tax policy, and the overall geopolitical environment. We remain focused on delivering strong operating performance, while continuing to make the right long-term investments for growth. This includes executing at a high level through the near-term market pressures by driving productivity, managing costs, and investing in our updated Total Home strategy while continuing to drive sustainable, long-term shareholder value.
OPERATIONS
The following table sets forth the percentage relationship to net sales of each line item of the consolidated statements of earnings. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements, including the related notes to the consolidated financial statements.
Basis Point Increase/(Decrease) in Percentage of Net Sales
2024 2023 2022 2024 vs. 2023 2023 vs. 2022
Net sales 100.00 % 100.00 % 100.00 %
Gross margin 33.32 33.39 33.23 (7) 16
Expenses:
Selling, general and administrative 18.74 18.02 20.94 72 (292)
Depreciation and amortization 2.07 1.99 1.82 8 17
Operating income 12.51 13.38 10.47 (87) 291
Interest - net 1.57 1.60 1.16 (3) 44
Pre-tax earnings 10.94 11.78 9.31 (84) 247
Income tax provision 2.63 2.83 2.68 (20) 15
Net earnings 8.31 % 8.95 % 6.63 % (64) 232
The following table sets forth key metrics utilized by management in assessing business performance. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements, including the related notes to the consolidated financial statements.
Other Metrics 2024 2023 20221
Comparable sales decrease2
(2.7) % (4.7) % (0.9) %
Total customer transactions (in millions) 809 835 937
Average ticket3
$ 103.37 $ 103.51 $ 103.64
At end of year:
Number of stores 1,748 1,746 1,738
Sales floor square feet (in millions) 195 195 195
Average store size selling square feet (in thousands)4
112 112 112
Net earnings to average debt and shareholders’ deficit 27.5 % 31.6 % 26.6 %
Return on invested capital5
32.0 % 36.4 % 30.4 %
1 The fiscal year ended February 3, 2023 had 53 weeks. The fiscal years ended January 31, 2025 and February 2, 2024 had 52 weeks.
2 A comparable location is defined as a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of 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. Operating locations which are sold are included in comparable sales until the date of sale. Comparable sales include online sales, which positively impacted comparable sales in fiscal 2024, fiscal 2023, and fiscal 2022 by approximately 50
basis points, 25 basis points, and 45 basis points, respectively. The comparable sales calculation for fiscal 2022 was calculated using sales for a comparable 52-week period.
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.
5 Return on invested capital is calculated using a non-GAAP financial measure. See below for additional information and reconciliations of non-GAAP measures.
Fiscal 2024 Compared to Fiscal 2023
Net Sales - Net sales decreased 3.1% to $83.7 billion in fiscal 2024. The decrease in total sales was primarily driven by the decrease in comparable sales. Comparable sales decreased 2.7% over the same period, driven by a 3.0% decline in comparable customer transactions, and a 0.3% increase in comparable average ticket. Comparable sales change during each quarter of the fiscal year, as reported, were declines of 4.1% in the first quarter, 5.1% in the second quarter, 1.1% in the third quarter, and an increase of 0.2% in the fourth quarter.
During fiscal 2024, we had comparable sales increases in Building Materials. An additional four product categories performed above the Company average, including Hardware, Rough Plumbing, Appliances, and Millwork. Strength in Building Materials reflects strong demand from Pro customers. Our DIY customer categories were impacted by lower DIY discretionary demand, particularly in bigger-ticket interior projects.
Gross Margin - Gross margin as a percentage of sales for fiscal 2024 decreased seven basis points compared to fiscal 2023. The gross margin decrease for the year was primarily driven by investments in our supply chain, partially offset by productivity initiatives.
SG&A - SG&A expense for fiscal 2024 deleveraged 72 basis points as a percentage of sales compared to fiscal 2023. This was primarily driven by employee compensation and benefits, due to higher bonus attainment and employee insurance costs, as well as cycling favorable legal settlements in the prior year.
Depreciation and Amortization - Depreciation and amortization expense deleveraged eight basis points for fiscal 2024 as a percentage of sales compared to fiscal 2023.
Interest - Net - Net interest expense is comprised of the following:
(In millions) 2024 2023
Interest expense, net of amount capitalized $ 1,445 $ 1,459
Amortization of original issue discount and loan costs 24 23
Interest on tax uncertainties 3 1
Interest income (159) (101)
Interest - net $ 1,313 $ 1,382
Net interest expense in fiscal 2024 leveraged three basis points.
Income Tax Provision - Our effective income tax rate was 24.0% in fiscal 2024 compared to 24.1% in fiscal 2023.
Fiscal 2023 Compared to Fiscal 2022
For a comparison of our results of operations, financial condition, liquidity, and capital resources for the fiscal years ended February 2, 2024, and February 3, 2023, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended February 2, 2024, filed with the SEC on March 25, 2024.
Non-GAAP Financial Measures
Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is considered a non-GAAP financial measure. The Company believes this non-GAAP financial measure provides useful insight for analysts and investors in understanding the comparison of operational performance for fiscal 2024 and fiscal 2023. Adjusted diluted earnings per share excludes the impact of certain items, further described below, not contemplated in the Company’s business outlook for fiscal 2024 and fiscal 2023.
Fiscal 2024 Impacts
•In fiscal 2024, the Company recognized pre-tax income of $177 million consisting of realized gains on the contingent consideration associated with the fiscal 2022 sale of the Canadian retail business (Canadian retail business transaction).
Fiscal 2023 Impacts
•In fiscal 2023, the Company recognized pre-tax income of $63 million consisting of a realized gain on the contingent consideration and adjustments to the selling price associated with the fiscal 2022 sale of the Canadian retail business (Canadian retail business transaction).
Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company’s diluted earnings per common share as prepared in accordance with GAAP. The Company’s methods of determining this non-GAAP financial measure may differ from the method used by other companies and may not be comparable.
2024 2023
Pre-Tax Earnings Tax1
Net Earnings Pre-Tax Earnings Tax1
Net Earnings
Diluted earnings per share, as reported $ 12.23 $ 13.20
Non-GAAP adjustments - per share impacts
Canadian retail business transaction (0.31) 0.07 (0.24) (0.11) - (0.11)
Adjusted diluted earnings per share $ 11.99 $ 13.09
1 Represents the tax benefit or expense related to the item excluded from adjusted diluted earnings per share.
Return on Invested Capital
Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Management believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate financial returns. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly, the method used by our management may differ from the methods used by other companies. We encourage you to understand the methods used by another company to calculate ROIC before comparing its ROIC to ours.
We define ROIC as the rolling 12 months’ lease adjusted net operating profit after tax (Lease adjusted NOPAT) divided by the average of current year and prior year ending debt and shareholders’ deficit. Lease adjusted NOPAT is a non-GAAP financial measure, and net earnings is considered to be the most comparable GAAP financial measure. The calculation of ROIC, together with a reconciliation of net earnings to Lease adjusted NOPAT, is as follows:
(In millions, except percentage data) 2024 2023 2022
Calculation of Return on Invested Capital
Numerator
Net earnings $ 6,957 $ 7,726 $ 6,437
Plus:
Interest expense - net 1,314 1,382 1,123
Operating lease interest 173 157 163
Provision for income taxes 2,196 2,449 2,599
Lease adjusted net operating profit 10,640 11,714 10,322
Less:
Income tax adjustment1
2,552 2,819 2,970
Lease adjusted net operating profit after tax $ 8,088 $ 8,895 $ 7,352
Denominator
Average debt and shareholders’ deficit2
$ 25,270 $ 24,418 $ 24,155
Net earnings to average debt and shareholders’ deficit 27.5 % 31.6 % 26.6 %
Return on invested capital3
32.0 % 36.4 % 30.4 %
1 Income tax adjustment is defined as net operating profit multiplied by the effective tax rate, which was 24.0%, 24.1%, and 28.8% for fiscal 2024, fiscal 2023, and fiscal 2022, respectively.
2 Average debt and shareholders’ deficit is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total shareholders’ deficit.
3 For the year ended January 31, 2025, February 2, 2024, and February 3, 2023, return on invested capital was impacted by approximately 44 basis points, 19 basis points, and -800 basis points, respectively, as a result of the sale of the Canadian retail business.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
Cash flows from operations, combined with our continued access to capital markets on both a short-term and long-term basis, as needed, remain adequate to fund our operations, make strategic investments to support long-term growth, return excess cash to shareholders in the form of dividends and share repurchases, and repay debt maturities as they become due. We believe these sources of liquidity will continue to support our business for the next twelve months. As of January 31, 2025, we held $1.8 billion of cash and cash equivalents, as well as $4.0 billion in undrawn capacity on our revolving credit facilities.
As of January 31, 2025, our material contractual obligations and commercial commitments consist of leases, long-term debt, purchase obligations, and letters of credit. See Note 5, Note 7, and Note 14 of the Notes to the Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data”, of this Annual Report for amounts outstanding related to leases, long-term debt, and commitments, respectively, as of January 31, 2025.
Cash Flows Provided by Operating Activities
(In millions) 2024 2023
Net cash provided by operating activities $ 9,625 $ 8,140
Cash flows from operating activities continued to provide the primary source of our liquidity. The increase in net cash provided by operating activities for the year ended January 31, 2025, compared to the year ended February 2, 2024, was primarily due to timing of income tax payments and other changes in working capital, partially offset by lower net earnings. Cash flows relating to changes in other operating liabilities improved $2.1 billion due primarily to timing of federal estimated tax payments. Fiscal 2023 includes payment of certain fiscal 2022 estimated tax payments deferred under the income tax relief announced by the Internal Revenue Service (IRS) for businesses located in states impacted by Hurricane Ian. In addition, fiscal 2024 benefited from deferral of certain federal estimated tax payments that were deferred until fiscal 2025 under the income tax relief announced by the IRS for businesses impacted by Hurricane Helene.
Cash Flows Used in Investing Activities
(In millions) 2024 2023
Net cash used in investing activities $ (1,738) $ (1,901)
Net cash used in investing activities primarily consists of transactions related to capital expenditures.
Capital expenditures
Our capital expenditures generally consist of investments in our strategic initiatives to enhance our ability to serve customers, improve existing stores, and support expansion plans. Capital expenditures were $1.9 billion in fiscal 2024 and $2.0 billion in fiscal 2023.
For fiscal 2025, our guidance for capital expenditures is approximately $2.5 billion. We may adjust our capital expenditures, if necessary or appropriate, to support our operations, to enhance long-term strategic positioning, or in response to the economic environment.
Cash Flows Used in Financing Activities
(In millions) 2024 2023
Net cash used in financing activities $ (7,047) $ (6,666)
Net cash used in financing activities primarily consist of transactions related to our debt, share repurchases, and cash dividend payments.
Total Debt
In fiscal 2024, we repaid a $450 million senior note at maturity.
In fiscal 2023, we issued $3.0 billion of unsecured notes in March 2023, and during fiscal 2023, we also repaid a $500 million senior note at maturity.
We have a $2.0 billion five-year unsecured revolving third amended and restated credit agreement (the Third Amended and Restated Credit Agreement), with a syndicate of banks, which has a maturity date of December 2026 and an aggregate availability of $2.0 billion. We also have a $2.0 billion five-year unsecured revolving amended and restated credit agreement dated September 1, 2023 (the 2023 Credit Agreement), with a syndicate of banks, which has a maturity date of September 2028 and an aggregate availability of $2.0 billion. Subject to obtaining commitments from the lenders and satisfying other conditions specified in the Third Amended and Restated Credit Agreement and the 2023 Credit Agreement (collectively, the Credit Agreements), the Company may increase the combined aggregate availability of the Credit Agreements by an additional $1.0 billion.
The Credit Agreements support our commercial paper program. The amount available to be drawn under the Credit Agreements is reduced by the amount of borrowings under our commercial paper program. There were no outstanding borrowings under the commercial paper program or Credit Agreements as of January 31, 2025. Total combined availability under the Credit Agreements as of January 31, 2025, was $4.0 billion. There were no outstanding borrowings under the Company’s commercial paper program as of February 2, 2024, and there were no outstanding borrowings under the Credit Agreements as of February 2, 2024.
The Third Amended and Restated Credit Agreement and the 2023 Credit Agreement contain customary representations, warranties, and covenants. We were in compliance with those covenants as of January 31, 2025.
The following table includes additional information related to our debt for fiscal 2024 and fiscal 2023:
(In millions, except for interest rate data) 2024 2023
Net proceeds from issuance of debt $ - $ 2,983
Repayment of debt $ (545) $ (601)
Net change in commercial paper $ - $ (499)
Maximum commercial paper outstanding at any period $ 250 $ 2,195
Short-term borrowings outstanding at year-end $ - $ -
Weighted-average interest rate of short-term borrowings outstanding - % - %
Share Repurchases
We have an ongoing share repurchase program, authorized by the Company’s Board of Directors, that is executed through purchases made from time to time either in the open market or through private off-market transactions. We also withhold shares from employees to satisfy tax withholding liabilities on share-based payments. Shares repurchased are returned to authorized and unissued status. The following table provides, on a settlement date basis, the total number of shares repurchased, average price paid per share, and the total amount paid for share repurchases for fiscal 2024 and fiscal 2023:
(In millions, except per share data) 2024 2023
Total amount paid for share repurchases1
$ 4,053 $ 6,138
Total number of shares repurchased 16.6 29.2
Average price paid per share $ 244.63 $ 210.07
1 Excludes unsettled share repurchases and unpaid excise taxes.
As of January 31, 2025, we had $10.8 billion remaining under our share repurchase program with no expiration date.
Dividends
In the third quarter of fiscal 2024, we increased our quarterly dividend payment by 5% to $1.15 per share. Our dividend payment dates are established such that dividends are paid in the quarter immediately following the quarter in which they are declared. The following table provides additional information related to our dividend payments for fiscal 2024 and fiscal 2023:
(In millions, except per share data and percentage data) 2024 2023
Total cash dividend payments $ 2,566 $ 2,531
Dividends paid per share $ 4.50 $ 4.30
Dividend payout ratio 37 % 33 %
Capital Resources
We expect to continue to have access to the capital markets on both short-term and long-term bases when needed for liquidity purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of March 24, 2025, which is disclosed to provide an enhanced understanding of our sources of liquidity and the effect of our ratings on our cost of funds. Our debt ratings have enabled, and should continue to enable, us the option to refinance our debt as it becomes due. Our commercial paper and senior debt ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.
Debt Ratings S&P Moody’s
Commercial Paper A-2 P-2
Senior Debt BBB+ Baa1
Outlook Stable Stable
There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a result of a downgrade in our debt rating or a decrease in our stock price.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the consolidated financial statements and notes to consolidated financial statements presented in this Annual Report requires us to make estimates that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.
Our significant accounting policies are described in Note 1 to the consolidated financial statements included herein. We believe that the following accounting policies affect the most significant estimates and management judgments used in preparing the consolidated financial statements.
Merchandise Inventory
Description
We record an inventory reserve for the estimated adjustment to mark down merchandise inventory to the lower of cost or net realizable value (LCNRV). This reserve is based on our current knowledge with respect to inventory levels, sales trends and historical experience. During fiscal 2024, our reserve decreased approximately $23 million to $222 million as of January 31, 2025.
We also record an inventory reserve for the estimated shrinkage between physical inventories. This reserve is based primarily on actual shrink results from previous physical inventories. During fiscal 2024, the inventory shrink reserve increased approximately $2 million to $427 million as of January 31, 2025.
In addition, we receive funds from vendors in the normal course of business, principally as a result of purchase volumes, early payments, or sales-based promotions of vendors’ products. Generally, these vendor funds do not represent the reimbursement of specific, incremental, and identifiable costs that we incurred to sell the vendor’s product. The majority of the vendor funds associated with these purchases are earned under agreements that are negotiated on an annual basis or shorter. The funds are recorded as a reduction to the cost of inventory as they are earned. As the related inventory is sold, the amounts are recorded as a reduction to cost of sales. Funds that are determined to be reimbursements of specific, incremental, and identifiable costs incurred to sell vendors’ products are recorded as an offset to the related expense.
Judgments and uncertainties involved in the estimate
We do not believe that our merchandise inventories are subject to significant risk of markdown in the near term in excess of our established reserves, and we have the ability to adjust purchasing practices based on anticipated sales trends and general economic conditions. However, changes in consumer purchasing patterns or a deterioration in product quality could result in the need for additional reserves. Likewise, changes in the estimated shrink reserve may be necessary, based on the timing and results of physical inventories. We also apply judgment in the determination of obsolete inventory and assumptions about net realizable value.
For vendor funds, we develop accrual rates based on the provisions of the agreements in place. Due to the diversity of the individual vendor agreements, we perform analyses and review historical purchase trends and volumes throughout the year, adjust accrual rates as appropriate and confirm actual amounts with select vendors to ensure the amounts earned are appropriately recorded. Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected purchase volumes, especially in the case of programs that provide for increased funding when graduated purchase volumes are met.
Effect if actual results differ from assumptions
We have not made any material changes in the methodology used to establish our inventory valuation or the related reserves for inventory during the past three fiscal years. We believe that we have sufficient current and historical knowledge to record reasonable estimates for both of these inventory reserves. However, it is possible that actual results could differ from recorded reserves. A 10% change in either the amount of inventory subject to markdown or the weighted average estimated loss rate used in the calculation of our LCNRV inventory reserve would each have affected net earnings by approximately $17 million for fiscal 2024. A 10% change in the estimated shrinkage rate included in the calculation of our inventory shrink reserve would have affected net earnings by approximately $32 million for fiscal 2024.
We have not made any material changes in the methodology used to recognize vendor funds during the past three fiscal years. If actual results are not consistent with the assumptions and estimates used, we could be exposed to additional adjustments that could positively or negatively impact gross margin and inventory. However, substantially all receivables
associated with these activities do not require subjective long-term estimates because they are collected within the following fiscal year. Adjustments to gross margin and inventory in the following fiscal year have historically not been material.
Self-Insurance
Description
We are self-insured for certain losses relating to workers’ compensation, automobile, property, general and product liability, extended protection plans, and certain medical and dental claims. We have excess insurance coverage above certain retention amounts to limit exposure from single events and earnings volatility. Our self-insured retention or deductible, as applicable, is limited to $2 million per occurrence involving workers’ compensation, and $10 million per occurrence involving general liability, product liability, and automobile liability. We do not have any excess insurance coverage for self-insured extended protection plan or medical and dental claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon our estimates of the discounted ultimate cost for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. During fiscal 2024, our self-insurance liabilities decreased approximately $138 million to $966 million as of January 31, 2025.
Judgments and uncertainties involved in the estimate
These estimates are subject to changes in the regulatory environment, utilized discount rate, projected exposures including payroll, sales and vehicle units, as well as the frequency, lag and severity of claims.
Effect if actual results differ from assumptions
We have not made any material changes in the methodology used to establish our self-insurance liability during the past three fiscal years. Although we believe that we have the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities. A 10% change in our self-insurance liability would have affected net earnings by approximately $72 million for fiscal 2024. A 100 basis point change in our discount rate would have affected net earnings by approximately $18 million for fiscal 2024.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A - Quantitative and Qualitative Disclosures about Market Risk
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates and commodity prices.
Interest Rate Risk
We use interest rate swap agreements as fair value hedges on certain debt. The fair value of our derivative financial instruments as of January 31, 2025, was not material. Fluctuations in interest rates do not have a material impact on our financial condition and results of operations because nearly all of our long-term debt is carried at amortized cost and consists primarily of fixed-rate instruments. Therefore, providing quantitative information about interest rate risk is not meaningful for our financial instruments.
Commodity Price Risk
We purchase certain commodity products that are subject to price volatility caused by factors beyond our control, which could potentially have a material impact on our financial condition and/or results of operations. We believe that the price volatility of these products is partially mitigated by our ability to adjust selling prices. The selling prices of these commodity products are influenced, in part, by the market price we pay and our competitive environment.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8 - Financial Statements and Supplementary Data
Page No.
Management’s Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Note 1: Summary of Significant Accounting Policies
Note 2: Revenue
Note 3: Fair Value Measurements
Note 4: Property and Accumulated Depreciation
Note 5: Leases
Note 6: Divestiture of the Canadian Retail Business
Note 7: Debt
Note 8: Derivative Instruments
Note 9: Shareholders’ Deficit
Note 10: Share-Based Payments
Note 11: Employee Retirement Plans
Note 12: Income Taxes
Note 13: Earnings Per Share
Note 14: Commitments and Contingencies
Note 15: Related Parties
Note 16: Other Information
Note 17: Segment Information
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Lowe’s Companies, Inc. and its subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting (Internal Control) as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our Internal Control was designed to provide reasonable assurance to our management and the Board of Directors regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to the reliability of financial reporting and financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness may vary over time.
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our Internal Control as of January 31, 2025. In evaluating our Internal Control, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013). Based on our management’s assessment, we have concluded that, as of January 31, 2025, our Internal Control is effective.
Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements contained in this Annual Report, was engaged to audit our Internal Control. Their report appears on page 37.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Lowe’s Companies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lowe’s Companies, Inc. and subsidiaries (the “Company”) as of January 31, 2025 and February 2, 2024, the related consolidated statements of earnings, comprehensive income, shareholders’ deficit, and cash flows, for each of the three years in the period ended January 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2025 and February 2, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 24, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Merchandise Inventory - Vendor Funds - Refer to Note 1 to the financial statements
Critical Audit Matter Description
The Company receives funds from vendors in the normal course of business, principally as a result of purchase volumes, early payments, or sales-based promotions of vendors’ products. Generally, these vendor funds do not represent the reimbursement of specific, incremental, and identifiable costs incurred by the Company to sell the vendor’s product. Therefore, the Company treats these funds as a reduction in the cost of inventory and are recognized as a reduction of cost of sales when the inventory is sold. Funds that are determined to be reimbursements of specific, incremental, and identifiable costs incurred to sell vendors’ products are recorded as an offset to the related expense. Due to the diversity of the individual vendor agreements, the Company performs analyses and reviews historical trends throughout the year and confirms actual amounts with select vendors to ensure the amounts earned are appropriately recorded. Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected annual purchase volumes, especially in the case of programs that provide for increased funding when graduated purchase volumes are met.
We identified the completeness and accuracy of vendor funds as a critical audit matter given the significance of vendor funds to the financial statements and volume of the individual vendor agreements. This required an increased extent of effort when performing audit procedures to evaluate whether the vendor funds were completely and accurately recorded in accordance with the vendor agreements.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to whether the vendor funds were completely and accurately recorded in accordance with the terms of the vendor agreements included the following, among others:
•We tested the design and operating effectiveness of controls over vendor funds, including management’s controls over the identification of vendor agreements as well as the accrual and recording of vendor funds as a reduction to the cost of inventory as they are earned, and as a reduction to cost of sales as the related inventory is sold.
•We selected a sample of vendor funds and recalculated the amount earned using the terms of the vendor agreement, including the amount recorded as a reduction to the cost of inventory when earned, and the amount recorded as a reduction to cost of sales as the related inventory is sold.
•We selected a sample of vendor funds and sent confirmations to test the completeness of programs as well as the accuracy of amounts earned and terms of the agreement directly with the vendor.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
March 24, 2025
We have served as the Company's auditor since 1962.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Lowe’s Companies, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Lowe’s Companies, Inc. and subsidiaries (the “Company”) as of January 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended January 31, 2025, of the Company and our report dated March 24, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
March 24, 2025
Lowe’s Companies, Inc.
Consolidated Statements of Earnings
(In millions, except per share and percentage data)
Fiscal Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Current Earnings Amount % Sales Amount % Sales Amount % Sales
Net sales $ 83,674 100.00 % $ 86,377 100.00 % $ 97,059 100.00 %
Cost of sales 55,797 66.68 57,533 66.61 64,802 66.77
Gross margin 27,877 33.32 28,844 33.39 32,257 33.23
Expenses:
Selling, general and administrative 15,682 18.74 15,570 18.02 20,332 20.94
Depreciation and amortization 1,729 2.07 1,717 1.99 1,766 1.82
Operating income 10,466 12.51 11,557 13.38 10,159 10.47
Interest - net 1,313 1.57 1,382 1.60 1,123 1.16
Pre-tax earnings 9,153 10.94 10,175 11.78 9,036 9.31
Income tax provision 2,196 2.63 2,449 2.83 2,599 2.68
Net earnings $ 6,957 8.31 % $ 7,726 8.95 % $ 6,437 6.63 %
Basic earnings per common share $ 12.25 $ 13.23 $ 10.20
Diluted earnings per common share $ 12.23 $ 13.20 $ 10.17
Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income
(In millions, except percentage data)
Fiscal Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Amount % Sales Amount % Sales Amount % Sales
Net earnings $ 6,957 8.31 % $ 7,726 8.95 % $ 6,437 6.63 %
Foreign currency translation adjustments - net of tax - - 5 0.01 36 0.04
Cash flow hedges - net of tax (13) (0.02) (14) (0.02) 309 0.32
Other 1 0.01 2 - (2) -
Other comprehensive (loss)/income (12) (0.01) (7) (0.01) 343 0.36
Comprehensive income $ 6,945 8.30 % $ 7,719 8.94 % $ 6,780 6.99 %
See accompanying notes to consolidated financial statements.
Lowe’s Companies, Inc.
Consolidated Balance Sheets
(In millions, except par value)
January 31, 2025 February 2, 2024
Assets
Current assets:
Cash and cash equivalents $ 1,761 $ 921
Short-term investments 372 307
Merchandise inventory - net 17,409 16,894
Other current assets 816 949
Total current assets 20,358 19,071
Property, less accumulated depreciation 17,649 17,653
Operating lease right-of-use assets 3,738 3,733
Long-term investments 277 252
Deferred income taxes - net 244 248
Other assets 836 838
Total assets $ 43,102 $ 41,795
Liabilities and shareholders’ deficit
Current liabilities:
Current maturities of long-term debt 2,586 537
Current operating lease liabilities 563 487
Accounts payable 9,290 8,704
Accrued compensation and employee benefits 1,008 954
Deferred revenue 1,358 1,408
Other current liabilities 3,952 3,478
Total current liabilities 18,757 15,568
Long-term debt, excluding current maturities 32,901 35,384
Noncurrent operating lease liabilities 3,628 3,737
Deferred revenue - Lowe’s protection plans 1,268 1,225
Other liabilities 779 931
Total liabilities 57,333 56,845
Commitments and contingencies
Shareholders’ deficit:
Preferred stock - $5 par value: Authorized - 5.0 million shares; Issued and outstanding - none
- -
Common stock - $0.50 par value: Authorized - 5.6 billion shares; Issued and outstanding - 560 million and 574 million, respectively
280 287
Accumulated deficit (14,799) (15,637)
Accumulated other comprehensive income 288 300
Total shareholders’ deficit (14,231) (15,050)
Total liabilities and shareholders’ deficit $ 43,102 $ 41,795
See accompanying notes to consolidated financial statements.
Lowe’s Companies, Inc.
Consolidated Statements of Shareholders’ Deficit
(In millions, except per share data)
Common Stock Capital in Excess
of Par Value Accumulated Deficit Accumulated Other Comprehensive
(Loss)/Income Total
Shares Amount
Balance January 28, 2022 670 $ 335 $ - $ (5,115) $ (36) $ (4,816)
Net earnings - - - 6,437 - 6,437
Other comprehensive income - - - - 343 343
Cash dividends declared, $3.95 per share
- - - (2,466) - (2,466)
Share-based payment expense - - 225 - - 225
Repurchases of common stock (71) (35) (375) (13,718) - (14,128)
Issuance of common stock under share-based payment plans 2 1 150 - - 151
Balance February 3, 2023 601 $ 301 $ - $ (14,862) $ 307 $ (14,254)
Net earnings - - - 7,726 - 7,726
Other comprehensive income - - - - (7) (7)
Cash dividends declared, $4.35 per share
- - - (2,531) - (2,531)
Share-based payment expense - - 209 - - 209
Repurchases of common stock (30) (15) (349) (5,970) - (6,334)
Issuance of common stock under share-based payment plans 3 1 140 - - 141
Balance February 2, 2024 574 $ 287 $ - $ (15,637) $ 300 $ (15,050)
Net earnings - - - 6,957 - 6,957
Other comprehensive loss - - - - (12) (12)
Cash dividends declared, $4.55 per share
- - - (2,578) - (2,578)
Share-based payment expense - - 222 - - 222
Repurchases of common stock (16) (8) (380) (3,541) - (3,929)
Issuance of common stock under share-based payment plans 2 1 158 - - 159
Balance January 31, 2025 560 $ 280 $ - $ (14,799) $ 288 $ (14,231)
See accompanying notes to consolidated financial statements.
Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows
(In millions)
Fiscal Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Cash flows from operating activities:
Net earnings $ 6,957 $ 7,726 $ 6,437
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 1,972 1,923 1,981
Noncash lease expense 520 499 530
Deferred income taxes 9 6 (239)
Asset impairment and loss on property - net 5 83 2,118
(Gain)/loss on sale of business (177) (79) 421
Share-based payment expense 221 210 223
Changes in operating assets and liabilities:
Merchandise inventory - net (514) 1,637 (2,594)
Other operating assets 93 182 56
Accounts payable 633 (1,820) (549)
Other operating liabilities (94) (2,227) 205
Net cash provided by operating activities 9,625 8,140 8,589
Cash flows from investing activities:
Purchases of investments (1,286) (1,785) (1,189)
Proceeds from sale/maturity of investments 1,204 1,722 1,174
Capital expenditures (1,927) (1,964) (1,829)
Proceeds from sale of property and other long-term assets 105 53 45
Proceeds from sale of business 177 100 491
Other - net (11) (27) (1)
Net cash used in investing activities (1,738) (1,901) (1,309)
Cash flows from financing activities:
Net change in commercial paper - (499) 499
Net proceeds from issuance of debt - 2,983 9,667
Repayment of debt (545) (601) (867)
Proceeds from issuance of common stock under share-based payment plans 159 141 151
Cash dividend payments (2,566) (2,531) (2,370)
Repurchases of common stock (4,053) (6,138) (14,124)
Other - net (42) (21) (5)
Net cash used in financing activities (7,047) (6,666) (7,049)
Effect of exchange rate changes on cash - - (16)
Net increase/(decrease) in cash and cash equivalents 840 (427) 215
Cash and cash equivalents, beginning of year 921 1,348 1,133
Cash and cash equivalents, end of year $ 1,761 $ 921 $ 1,348
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JANUARY 31, 2025, FEBRUARY 2, 2024, AND FEBRUARY 3, 2023
NOTE 1: Summary of Significant Accounting Policies
Lowe’s Companies, Inc. and subsidiaries (the Company) is the world’s second-largest home improvement retailer and operated 1,748 stores and outlets in the United States as of January 31, 2025. On February 3, 2023, Lowe’s completed the sale of its Canadian retail business, which operated 232 stores in Canada, as well as serviced 210 dealer-owned stores. The Canadian retail business included a number of complementary formats under the banners of RONA, Lowe’s Canada, Réno-Dépôt, and Dick’s Lumber. See Note 6 for information on this divestiture.
Below are those accounting policies considered by the Company to be significant.
Fiscal Year - The Company’s fiscal year ends on the Friday nearest the end of January. Fiscal 2022 contained 53 weeks, and fiscal years 2023 and 2024 each contained 52 weeks. All references herein for the years 2024, 2023, and 2022 represent the fiscal years ended January 31, 2025, February 2, 2024, and February 3, 2023, respectively.
Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All intercompany accounts and transactions have been eliminated.
Foreign Currency - The functional currencies of the Company’s international subsidiaries are generally the local currencies of the countries in which the subsidiaries are located. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of shareholders’ deficit in accumulated other comprehensive income. Gains and losses from foreign currency transactions are included in SG&A expense.
Use of Estimates - The preparation of the Company’s financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosures of contingent assets and liabilities. The Company bases these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.
Cash and Cash Equivalents - Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturities of three months or less when purchased. Cash and cash equivalents are carried at amortized cost on the consolidated balance sheets. The majority of payments due from financial institutions for the settlement of credit card and debit card transactions process within two business days and are, therefore, classified as cash and cash equivalents.
Investments - Investments generally consist of certificates of deposit, commercial paper, corporate debt securities, governmental securities, and money market funds, which are classified as available-for-sale. Available-for-sale debt securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income. The proceeds from sales and gross realized gains and losses on available-for-sale debt securities were not significant for any of the periods presented.
Also included in long-term investments is performance-based contingent consideration associated with the sale of the Canadian retail business. The Company accounts for the contingent consideration under the fair value option under Accounting Standards Codification (ASC) 825, Financial Instruments, which requires the contingent consideration to be recorded at fair value upon recognition and as of each balance sheet date thereafter. Changes in the estimated fair value of the contingent consideration are recognized within SG&A expense in the consolidated statements of earnings.
Investments with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations are classified as short-term investments. All other investments are classified as long-term. Available-for-sale debt securities classified as long-term as of January 31, 2025, will mature in one to three years, based on stated maturity dates.
The Company classifies as investments restricted balances pledged as collateral for the Company’s extended protection plan program. Restricted balances included in short-term investments were $372 million as of January 31, 2025, and $307 million as of February 2, 2024. Restricted balances included in long-term investments were $277 million as of January 31, 2025, and $252 million as of February 2, 2024.
Merchandise Inventory - The Company’s inventory is stated at the lower of cost and net realizable value (LCNRV) using the first-in, first-out method of inventory accounting. The cost of inventory includes certain costs associated with the preparation of inventory for resale, including distribution center costs, and is net of vendor funds.
The Company records an inventory reserve for the estimated adjustment to mark down merchandise inventory to the lower of cost or net realizable value. This reserve is based on management’s current knowledge with respect to inventory levels, sales trends, and historical experience. Management does not believe the Company’s merchandise inventories are subject to significant risk of markdown in the near term in excess of established reserves, and management has the ability to adjust purchasing patterns based on anticipated sales trends and general economic conditions. However, changes in consumer purchasing patterns could result in the need for additional reserves. The Company’s LCNRV inventory reserve was $222 million as of January 31, 2025, and $245 million as of February 2, 2024.
The Company also records an inventory reserve for the estimated shrinkage between physical inventories. This reserve is based primarily on actual shrink results from previous physical inventories. Changes in the estimated shrink reserve are made based on the timing and results of physical inventories. The Company’s reserve for inventory shrinkage was $427 million as of January 31, 2025, and $425 million as of February 2, 2024.
The Company receives funds from vendors in the normal course of business, principally as a result of purchase volumes, early payments, or sales-based promotions of vendors’ products. Generally, these vendor funds do not represent the reimbursement of specific, incremental, and identifiable costs incurred by the Company to sell the vendor’s product. Therefore, the Company treats these funds as a reduction in the cost of inventory and are recognized as a reduction of cost of sales when the inventory is sold. Funds that are determined to be reimbursements of specific, incremental, and identifiable costs incurred to sell vendors’ products are recorded as an offset to the related expense. The Company develops accrual rates for vendor funds based on the provisions of the agreements in place. Due to the diversity of the individual vendor agreements, the Company performs analyses and reviews historical trends throughout the year and confirms actual amounts with select vendors to ensure the amounts earned are appropriately recorded. Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected annual purchase volumes, especially in the case of programs that provide for increased funding when graduated purchase volumes are met.
Derivative Financial Instruments - The Company is exposed to the impact of changes in benchmark interest rates and the prices of commodities used in the normal course of business. The Company occasionally utilizes derivative financial instruments to manage certain business risks. All derivative financial instruments are recognized at their fair values as either assets or liabilities at the balance sheet date and reported on a gross basis.
The Company held fixed-to-floating interest rate swap agreements as fair value hedges on certain debt as of January 31, 2025, and February 2, 2024. The Company evaluates the effectiveness of the fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective. Thus, the change in fair value of the derivative instruments offsets the change in fair value on the hedged debt, and there is no net impact in the consolidated statements of earnings from the fair value of the derivatives.
The Company held forward interest rate swap agreements to hedge its exposure to changes in benchmark interest rates on forecasted debt issuances as of February 3, 2023. The cash flows related to forward interest rate swap agreements are included within operating activities in the consolidated statements of cash flows. The Company accounts for these contracts as cash flow hedges, thus the effective portion of gains and losses resulting from changes in fair value are recognized in other comprehensive (loss)/income, net of tax effects, in the consolidated statements of comprehensive income and is amortized to interest expense over the term of the respective debt.
Credit Programs and Sale of Business Accounts Receivable - The Company has branded and private label proprietary credit cards which generate sales that are not reflected in receivables. Under an agreement with Synchrony Bank (Synchrony), credit is extended directly to customers by Synchrony. All credit program-related services are performed and controlled directly by Synchrony. The Company has the option, but no obligation, to purchase the receivables at the end of the agreement.
Prior to September 2023, the Company also had an agreement with Synchrony under which Synchrony purchased at face value commercial business accounts receivable originated by the Company and serviced those accounts. The Company primarily accounted for these transfers as sales of the accounts receivable. When the Company transferred its commercial business accounts receivable, it retained certain interests in those receivables, including the funding of a loss reserve and its obligation related to Synchrony’s ongoing servicing of the receivables sold. Any gain or loss on the sale was determined based on the previous carrying amounts of the transferred assets allocated at fair value between the receivables sold and the interests
retained. Fair value was based on the present value of expected future cash flows, taking into account the key assumptions of anticipated credit losses, payment rates, late fee rates, Synchrony’s servicing costs, and the discount rate commensurate with the uncertainty involved. Due to the short-term nature of the receivables sold, changes to the key assumptions would not materially impact the recorded gain or loss on the sales of receivables or the fair value of the retained interests in the receivables.
In 2023, Synchrony exercised an option under the agreement to directly extend credit to the commercial accounts receivable customers, for which the related transition period was completed in August 2023. In 2023, prior to the option’s effective date, $3.1 billion of accounts receivable were sold to Synchrony and the Company recognized a loss of $63 million related to the servicing costs remitted to Synchrony monthly. In 2022, total commercial business accounts receivable sold to Synchrony were $5.2 billion and the Company recognized a loss of $76 million.
Property and Depreciation - Property is recorded at cost. Costs associated with major additions are capitalized and depreciated. Capital assets are expected to yield future benefits and have original useful lives which exceed one year. The total cost of a capital asset generally includes all applicable sales taxes, delivery costs, installation costs, and other appropriate costs incurred by the Company, including interest in the case of self-constructed assets. Upon disposal, the cost of properties and related accumulated depreciation is removed from the accounts, with gains and losses reflected in SG&A expense in the consolidated statements of earnings.
Property consists of land, buildings and building improvements, equipment, and construction in progress. Buildings and building improvements includes owned buildings, as well as buildings under finance lease and leasehold improvements. Equipment primarily includes store racking and displays, computer hardware and software, forklifts, vehicles, finance lease equipment, and other store equipment. In addition, excess properties held for use are included within land and buildings.
Depreciation is recognized over the estimated useful lives of the depreciable assets. Assets are depreciated using the straight-line method. Leasehold improvements and finance lease assets are depreciated and amortized, respectively, over the shorter of their estimated useful lives or the term of the related lease. The amortization of these assets is included in depreciation and amortization expense in the consolidated statements of earnings.
Long-Lived Asset Impairment - The carrying amounts of long-lived assets are reviewed whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. A potential impairment has occurred for long-lived assets held-for-use if projected future undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than the carrying amounts of the assets. For operating locations identified for sale or closure, a market approach is used to determine the fair value of the asset group. The carrying value of an operating location’s asset group includes inventory, property, operating and finance lease right-of-use assets, and operating liabilities, including accounts payables, accrued compensation, and operating lease liabilities. Financial and non-operating liabilities are excluded from the carrying value of the asset group. An impairment loss is recorded for long-lived assets held-for-use when the carrying amount of the asset is not recoverable and exceeds its fair value. Impairment losses are included in SG&A expense in the consolidated statements of earnings.
Excess properties that are expected to be sold within the next twelve months and meet the other relevant held-for-sale criteria are classified as long-lived assets held-for-sale. Excess properties consist primarily of retail outparcels and property associated with relocated or closed locations. An impairment loss is recorded for long-lived assets held-for-sale when the carrying amount of the asset exceeds its fair value less cost to sell. A long-lived asset is not depreciated while it is classified as held-for-sale.
For long-lived assets to be abandoned, the Company considers the asset to be disposed of when it ceases to be used. Until it ceases to be used, the Company continues to classify the asset as held-for-use and tests for potential impairment accordingly. If the Company commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, its depreciable life is evaluated.
Leases - The Company leases certain retail stores, warehouses, distribution centers, office space, land, and equipment under finance and operating leases. Lease commencement occurs on the date the Company takes possession or control of the property or equipment. Original terms for facility-related leases are generally between five and 20 years. These leases generally contain provisions for four to six renewal options of five years each. Original terms for equipment-related leases, primarily material handling equipment and vehicles, are generally between one and seven years. Some of the Company’s leases also include rental escalation clauses and/or termination provisions. Renewal options and termination options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital. Leases with an original term of twelve months or less are not recognized on the Company’s balance sheet, and the lease expense related to those short-term leases is recognized over the
lease term. The Company does not account for lease and non-lease (e.g., common area maintenance) components of contracts separately for any underlying asset class.
If readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, the Company’s estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement.
The Company’s real estate leases typically require payment of common area maintenance and real estate taxes which represent the majority of variable lease costs. Certain lease agreements also provide for variable rental payments based on sales performance in excess of specified minimums, usage measures, or changes in the consumer price index. Variable rent payments based on future performance, usage, or changes in indices were not significant for any of the periods presented. Variable lease costs are excluded from the present value of lease obligations.
The Company’s lease agreements do not contain any material restrictions, covenants, or any material residual value guarantees. The Company subleases certain properties that are not used in its operations. Sublease income was not significant for any of the periods presented.
Accounts Payable - The Company has an agreement with a third party to provide a supplier finance program which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into these arrangements is to capture overall savings in the form of pricing, payment terms, or vendor funding, created by facilitating suppliers’ ability to finance payment obligations at more favorable discount rates, while providing them with greater working capital flexibility.
The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by these arrangements for those payment obligations that have been financed by suppliers. The rollforward of the Company’s outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Financed payment obligations outstanding at the beginning of the year $ 1,356 $ 2,257 $ 2,274
Payment obligations financed during the year 9,926 9,573 12,159
Financed payment obligations paid during the year (9,771) (10,474) (12,176)
Financed payment obligations outstanding at the end of the year $ 1,511 $ 1,356 $ 2,257
Other Current Liabilities - Other current liabilities on the consolidated balance sheets consist of:
(In millions) January 31, 2025 February 2, 2024
Accrued dividends $ 645 $ 633
Income taxes payable 491 33
Accrued interest 449 456
Self-insurance liabilities 432 431
Sales tax liabilities 195 164
Sales return reserve 167 191
Accrued property taxes 138 130
Other 1,435 1,440
Total $ 3,952 $ 3,478
Self-Insurance - The Company is self-insured for certain losses relating to workers’ compensation, automobile, property, and general and product liability claims. The Company has excess insurance coverage above certain retention amounts to limit
exposure from these claims. The Company is also self-insured for certain losses relating to extended protection plans, as well as medical and dental claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management’s estimates of the discounted ultimate cost for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities. Total self-insurance liabilities, including the current and non-current portions, were $966 million as of January 31, 2025, and $1.1 billion as of February 2, 2024.
The Company provides surety bonds issued by insurance companies to secure payment of workers’ compensation liabilities as required in certain states where the Company is self-insured. Outstanding surety bonds relating to self-insurance were $272 million as of January 31, 2025, and $280 million as of February 2, 2024.
Income Taxes - The Company establishes deferred income tax assets and liabilities for temporary differences between the tax and financial accounting bases of assets and liabilities. The tax effects of such differences are reflected in the consolidated balance sheets at the enacted tax rates expected to be in effect when the differences reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets if it is more likely than not that all or a portion of the asset will not be realized. The tax balances and income tax expense recognized by the Company are based on management’s interpretation of the tax statutes of multiple jurisdictions.
The Company establishes a liability for tax positions for which there is uncertainty as to whether or not the position will be ultimately sustained. The Company includes interest related to tax issues as part of net interest on the consolidated statements of earnings. The Company records any applicable penalties related to tax issues within the income tax provision.
Transferable Tax Credits
In August 2022, the Inflation Reduction Act was enacted which included provisions that allow for the transfer of certain federal clean energy tax credits (Federal Transferable Tax Credits). The Company paid $909 million and $143 million for the purchase of Federal Transferable Tax Credits in 2024 and 2023, respectively. All amounts paid have been included in payments for income taxes, and differences between tax credits purchased and amounts paid are included as a component of the income tax provision.
Income Tax Relief
On October 1, 2024, the Internal Revenue Service announced that businesses in North Carolina, affected by Hurricane Helene would receive tax relief by postponing certain tax-payment deadlines. Under this relief, certain federal estimated income tax payments can be deferred until May 1, 2025. As of January 31, 2025, the Company deferred $478 million of federal income taxes payable, which is included in other current liabilities in the consolidated balance sheet.
Shareholders’ Deficit - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private market transactions. Shares purchased under the repurchase program are returned to authorized and unissued status. Any excess of cost over par value is charged to additional paid-in capital to the extent that a balance is present. Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to accumulated deficit.
In August 2022, the Inflation Reduction Act enacted a 1% excise tax on net share repurchases after December 31, 2022. Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired in the consolidated statements of shareholders’ deficit.
Revenue Recognition - The Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. A description of the Company’s principle revenue generating activities is as follows:
•Products - Revenue from products primarily relates to in-store and online merchandise purchases, which are recognized at the point in time when the customer obtains control of the merchandise. This occurs at the time of in-store purchase or delivery of the product to the customer. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. The merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets.
•Services - Revenues from services primarily relate to professional installation services the Company provides through subcontractors related to merchandise purchased by a customer. In certain instances, installation services include materials provided by the subcontractor, and both product and installation are included in service revenue. The Company recognizes revenue associated with services as they are rendered, and the majority of services are completed within one week from initiation.
Retail deferred revenue consists of amounts received for which customers have not yet taken possession of the merchandise or for which installation has not yet been completed. Deferred revenue is recognized in sales either at a point in time when the customer obtains control of merchandise through pickup or delivery, or over time as services are provided to the customer. The majority of revenue for goods and services is recognized in the quarter following revenue deferral. In addition, the Company defers revenues from stored-value cards, which include gift cards and returned merchandise credits, and recognizes revenue into sales when the cards are redeemed.
The Company also defers revenue for its separately-priced long-term protection plan contracts (Lowe’s protection plans), which is a Lowe’s-branded program for which the Company is ultimately self-insured. The Company recognizes revenue from Lowe’s protection plan sales on a straight-line basis over the respective contract term. Expenses for claims are recognized in cost of sales when incurred. Incremental direct acquisition costs and administrative costs to fulfill the contracts associated with Lowe's protection plans for contracts greater than one year are also deferred and recognized as expense on a straight-line basis over the respective contract term. Lowe’s protection plan contract terms primarily range from one to five years from the date of purchase or the end of the manufacturer’s warranty, as applicable.
Cost of Sales and Selling, General and Administrative Expenses - The following lists the primary costs classified in each major expense category:
Cost of Sales Selling, General and Administrative
n Total cost of products sold, including:
- Purchase costs, net of vendor funds;
- Freight expenses associated with moving merchandise inventories from vendors to selling locations;
- Costs associated with operating the Company’s distribution network, including employee compensation and benefit costs and occupancy costs;
- Depreciation of assets associated with the Company’s distribution network;
n Costs of installation services provided;
n Costs associated with shipping and handling to customers, as well as directly from vendors to customers by third parties;
n Depreciation of assets used in delivering product to customers;
n Costs associated with inventory shrinkage and markdown;
n Costs of services performed under the Lowe’s protection plan.
n Generally, payroll and benefit costs for retail and corporate employees;
n Occupancy costs of retail and corporate facilities;
n Advertising;
n Store environment costs;
n Tender costs, including bank charges, costs associated with credit card interchange fees;
n Costs associated with self-insured plans, and premium costs for stop-loss coverage and fully insured plans;
n Long-lived asset impairment losses, gains/losses on disposal of assets, and exit costs;
n Other administrative costs, such as supplies, and travel and entertainment.
Advertising - Costs associated with advertising are charged to SG&A expense as incurred. Advertising expenses were $921 million, $831 million, and $869 million in 2024, 2023, and 2022, respectively.
Comprehensive Income - The Company reports comprehensive income in its consolidated statements of comprehensive income and consolidated statements of shareholders’ deficit. Comprehensive income represents changes in shareholders’ deficit from non-owner sources and is comprised of net earnings adjusted primarily for cash flow hedge derivative contracts. Net cash flow hedge gains, net of tax, classified in accumulated other comprehensive income were $288 million, $301 million, and $315 million as of January 31, 2025, February 2, 2024, and February 3, 2023, respectively.
Reclassifications - Income taxes payable for the prior year was reclassified to conform with current year presentation and is included in Other current liabilities on the consolidated balance sheets.
Accounting Pronouncements Recently Adopted - Effective November 2, 2024, the Company adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Under the ASU, all disclosure requirements in this update and ASC 280, Segment Reporting, are required for public entities with a single reportable segment. See Note 17 for additional details of the Company’s reportable segment.
Accounting Pronouncements Not Yet Adopted -
In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU expands income tax disclosures in the effective tax rate reconciliation table and income taxes paid. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2026. The Company is currently evaluating the impact of adopting this ASU on its disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The ASU requires a public business entity to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains those expenses. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2028, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its disclosures.
Recent accounting pronouncements pending adoption not discussed in this Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.
NOTE 2: Revenue
Net sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the sale of goods and services in amounts that reflect consideration the Company is entitled to in exchange for those goods and services.
The following table presents the Company’s sources of revenue:
(In millions) Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Products $ 80,538 $ 83,002 $ 93,392
Services 1,934 2,097 2,178
Other 1,202 1,278 1,489
Net sales $ 83,674 $ 86,377 $ 97,059
The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:
(In millions) Classification January 31, 2025 February 2, 2024
Anticipated sales returns Other current liabilities $ 167 $ 191
Right of return assets Other current assets 99 111
Deferred revenue - retail and stored-value cards
Deferred revenue for retail and stored-value cards are as follows:
(In millions) January 31, 2025 February 2, 2024
Retail deferred revenue $ 770 $ 796
Stored-value cards deferred revenue 588 612
Deferred revenue $ 1,358 $ 1,408
Deferred revenue - Lowe’s protection plans
Deferred revenue associated with Lowe’s protection plans is as follows:
(In millions) January 31, 2025 February 2, 2024
Deferred revenue - Lowe’s protection plans $ 1,268 $ 1,225
Lowe’s protection plan sales previously recorded as deferred revenue and claim expenses incurred are as follows:
(In millions) Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Lowe’s protection plan deferred revenue recognized into sales $ 561 $ 549 $ 527
Lowe’s protection plan claim expenses 210 224 180
Disaggregation of Revenues
The following table presents the Company’s net sales disaggregated by merchandise division:
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
(In millions) Total Sales % Total Sales % Total Sales %
Home Décor1
$ 30,862 36.9 % $ 32,136 37.2 % $ 36,212 37.3 %
Building Products2
26,380 31.5 26,949 31.2 31,321 32.3
Hardlines3
24,256 29.0 24,954 28.9 26,925 27.7
Other 2,176 2.6 2,338 2.7 2,601 2.7
Total $ 83,674 100.0 % $ 86,377 100.0 % $ 97,059 100.0 %
Note: Merchandise division net sales for prior periods have been reclassified to conform to the current year presentation.
1 Home Decor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint
2 Building Products includes the following product categories: Building Materials, Electrical, Lumber, Millwork, and Rough Plumbing
3 Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools
The following table presents the Company’s net sales disaggregated by geographical area:
(In millions) Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
United States $ 83,674 $ 86,377 $ 92,010
Canada1
- - 5,049
Net Sales $ 83,674 $ 86,377 $ 97,059
1 The Canadian retail business was sold on February 3, 2023.
NOTE 3: Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows:
•Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
•Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
•Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
The following table presents the Company’s financial assets and financial liabilities measured at fair value on a recurring basis.
Fair Value Measurements at
(In millions) Classification Measurement Level January 31, 2025 February 2, 2024
Available-for-sale debt securities:
U.S. Treasury securities Short-term investments Level 1 $ 199 $ 152
Money market funds Short-term investments Level 1 91 56
Commercial paper Short-term investments Level 2 49 5
Corporate debt securities Short-term investments Level 2 16 50
Certificates of deposit Short-term investments Level 1 13 42
Foreign government debt securities Short-term investments Level 2 4 -
Municipal obligations Short-term investments Level 2 - 2
U.S. Treasury securities Long-term investments Level 1 150 213
Corporate debt securities Long-term investments Level 2 88 35
Foreign government debt securities Long-term investments Level 2 37 4
Municipal obligations Long-term investments Level 2 2 -
Derivative instruments:
Fixed-to-floating interest rate swaps Other current liabilities Level 2 $ 11 $ -
Fixed-to-floating interest rate swaps Other liabilities Level 2 35 76
There were no transfers between Levels 1, 2, or 3 during any of the periods presented.
When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, financial assets were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values for financial assets and liabilities classified within Level 2 were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads, and benchmark securities, among others.
In addition, the Company has received performance-based contingent consideration related to the fiscal 2022 sale of the Canadian retail business and is classified as a Level 3 long-term investment. The Company determined the initial fair value for contingent consideration as of February 3, 2023, based on an income approach using an option pricing model, calculated using the significant unobservable inputs such as total equity value, volatility, and expected term. Subsequent measurements of fair value of the contingent consideration are based on an income approach, which requires certain assumptions considering operating performance of the business and a risk-adjusted discount rate.
The rollforward of the fair value of contingent consideration is as follows:
Years Ended
(In millions) January 31, 2025 February 2, 2024
Beginning balance $ - $ 21
Change in fair value 177 102
Proceeds received (177) (123)
Ending balance $ - $ -
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
For the fiscal years ended January 31, 2025, and February 2, 2024, the Company had no material measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.
Other Fair Value Disclosures
The Company’s financial assets and liabilities not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable, and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. As further described in Note 8, certain long-term debt is associated with a fair value hedge, and the changes in fair value of the hedged debt is included in the carrying value of long-term debt on the consolidated balance sheets. The fair values of the Company’s unsecured notes were estimated using quoted market prices. The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate.
Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding finance lease obligations, are as follows:
January 31, 2025 February 2, 2024
(In millions) Carrying Amount Fair Value Carrying Amount Fair Value
Unsecured notes (Level 1) $ 35,011 $ 31,557 $ 35,409 $ 32,757
Mortgage notes (Level 2) 1 1 2 2
Long-term debt (excluding finance lease obligations) $ 35,012 $ 31,558 $ 35,411 $ 32,759
NOTE 4: Property and Accumulated Depreciation
Property is summarized by major class in the following table:
(In millions) Estimated Depreciable Lives, In Years January 31, 2025 February 2, 2024
Cost:
Land N/A $ 6,811 $ 6,785
Buildings and building improvements 7-40
18,386 18,039
Equipment 2-15
10,988 10,238
Construction in progress N/A 616 708
Total cost 36,801 35,770
Accumulated depreciation (19,152) (18,117)
Property, less accumulated depreciation $ 17,649 $ 17,653
Included in property, less accumulated depreciation are right-of-use assets under finance leases. The related amortization expense for right-of-use assets under finance leases is included in depreciation and amortization expense. The Company recognized depreciation and amortization expense, inclusive of amounts presented in cost of sales, of $2.0 billion in 2024, and $1.9 billion in 2023 and 2022.
NOTE 5: Leases
The lease-related assets and liabilities recorded on the balance sheet are summarized in the following table:
(In millions)
Classification January 31, 2025 February 2, 2024
Assets
Operating lease assets Operating lease right-of-use assets $ 3,738 $ 3,733
Finance lease assets Property, less accumulated depreciation1
395 425
Total lease assets 4,133 4,158
Liabilities
Current
Operating Current operating lease liabilities 563 487
Finance Current maturities of long-term debt 87 87
Noncurrent
Operating Noncurrent operating lease liabilities 3,628 3,737
Finance Long-term debt, excluding current maturities 388 422
Total lease liabilities $ 4,666 $ 4,733
1Finance lease assets are recorded net of accumulated amortization of $373 million as of January 31, 2025, and $326 million as of February 2, 2024.
The table below presents the lease costs for finance and operating leases:
(In millions)
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Finance lease cost
Amortization of leased assets $ 92 $ 88 $ 90
Interest on lease liabilities 23 24 29
Operating lease cost1
712 630 734
Variable lease cost 268 258 329
Total lease cost $ 1,095 $ 1,000 $ 1,182
1Includes short-term leases and sublease income, which are immaterial.
The future minimum rental payments required under operating and finance lease obligations as of January 31, 2025, having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:
(In millions)
Operating Leases1
Finance
Leases2
Total
Fiscal 2025 $ 683 $ 101 $ 784
Fiscal 2026 726 95 821
Fiscal 2027 700 65 765
Fiscal 2028 676 59 735
Fiscal 2029 527 47 574
Thereafter 1,913 214 2,127
Total lease payments 5,225 581 5,806
Less: interest3
(1,034) (106) (1,140)
Present value of lease liabilities4
$ 4,191 $ 475 $ 4,666
1Operating lease payments include $469 million related to options to extend lease terms that are reasonably certain of being exercised and
exclude $205 million of minimum lease payments for leases signed but not yet commenced.
2Finance lease payments exclude $2 million of minimum lease payments for leases signed but not yet commenced.
3Calculated using the lease-specific incremental borrowing rate.
4Includes the current portion of $563 million for operating leases and $87 million for finance leases.
Lease Term and Discount Rate January 31, 2025 February 2, 2024
Weighted-average remaining lease term (years)
Operating leases 8.97 9.23
Finance leases 8.68 8.75
Weighted-average discount rate
Operating leases 4.28 % 4.11 %
Finance leases 4.89 % 4.93 %
Other Information Years Ended
(In millions)
January 31, 2025 February 2, 2024 February 3, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases $ 743 $ 689 $ 788
Operating cash flows used for finance leases 22 24 29
Financing cash flows used for finance leases 86 92 90
Leased assets obtained in exchange for new finance lease liabilities 47 50 51
Leased assets obtained in exchange for new operating lease liabilities1
545 696 729
1Excludes $205 million of leases signed but not yet commenced as of January 31, 2025.
NOTE 6: Divestiture of the Canadian Retail Business
On February 3, 2023, the Company sold its Canadian retail business to Sycamore Partners for $491 million in cash and performance-based contingent consideration with an initial fair value of $21 million, which was recognized as a financial asset in long-term investments on the consolidated balance sheet. The Canadian retail business operated or serviced the corporate and independent dealer-owned stores in a number of complementary formats under different banners, which include RONA, Lowe’s Canada, Réno-Dépôt, and Dick’s Lumber. The decision to sell the business was made as part of the Company’s strategy to simplify its business model and focus on the U.S. home improvement business.
During the fiscal year ended January 31, 2025, the Company recognized a pre-tax gain on sale of $177 million associated with performance-based contingent consideration received. During the fiscal year ended February 2, 2024, the Company recognized a pre-tax gain on sale of $79 million associated with performance-based consideration received, as well as final adjustments to the selling price. During the fiscal year ended February 3, 2023, the Company recorded $2.5 billion of pre-tax costs associated with the sale, inclusive of long-lived asset impairment, loss on sale, and other closing costs. The cumulative foreign currency translation adjustment previously included in accumulated other comprehensive income was reclassified to earnings and included in the loss on sale. A summary of the significant activity included within SG&A expense in the consolidated statements of earnings associated with the sale of the Canadian retail business is as follows:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Long-lived asset impairment $ - $ - $ 2,061
(Gain)/loss on sale (177) (79) 421
Other closing costs - - 19
Total $ (177) $ (79) $ 2,501
NOTE 7: Debt
Commercial Paper Program
The Company’s commercial paper program is supported by the $2.0 billion five-year unsecured revolving credit agreement entered into in September 2023 (2023 Credit Agreement), and the $2.0 billion five-year unsecured third amended and restated credit agreement entered into in December 2021, and as amended (Third Amended and Restated Credit Agreement). The amounts available to be drawn under the 2023 Credit Agreement and the Third Amended and Restated Credit Agreement are reduced by the amount of borrowings under the commercial paper program.
Subject to obtaining commitments from the lenders and satisfying other conditions specified in the 2023 Credit Agreement and Third Amended and Restated Credit Agreement (collectively, the Credit Agreements), the Company may increase the combined aggregate availability of both agreements by an additional $1.0 billion. The Credit Agreements contain customary representations, warranties, and covenants for transactions of these type. The Company was in compliance with those financial covenants as of January 31, 2025.
There were no borrowings under the Company’s commercial paper program, Third Amended and Restated Credit Agreement, or the 2023 Credit Agreement as of January 31, 2025, and February 2, 2024. Total combined availability under the Credit Agreements was $4.0 billion as of January 31, 2025.
Long-Term Debt
Debt Category
(In millions, except percentage data)
Weighted-Average Interest Rate as of January 31, 2025 January 31, 2025 February 2, 2024
Secured debt:
Mortgage notes due through fiscal 20271
6.24 % $ 1 $ 2
Unsecured debt:
Notes due through fiscal 2029 3.40 % 11,215 11,623
Notes due fiscal 2030-2034 3.70 % 7,709 7,703
Notes due fiscal 2035-2039 5.93 % 858 858
Notes due fiscal 2040-2044 4.09 % 2,578 2,578
Notes due fiscal 2045-2049 4.04 % 3,820 3,818
Notes due fiscal 2050-2054 4.35 % 6,118 6,117
Notes due fiscal 2060-2064 5.19 % 2,713 2,713
Finance lease obligations due through fiscal 2043 475 509
Total long-term debt 35,487 35,921
Less: current maturities (2,586) (537)
Long-term debt, excluding current maturities $ 32,901 $ 35,384
1 Real properties with an aggregate book value of $11 million as of January 31, 2025, were pledged as collateral for secured debt.
Principal amount of debt maturities, exclusive of unamortized original issue discounts, unamortized debt issuance costs, fair-value hedge adjustments, and finance lease obligations, for the next five fiscal years and thereafter are as follows:
(In millions) Principal
Fiscal 2025 $ 2,500
Fiscal 2026 2,350
Fiscal 2027 2,368
Fiscal 2028 2,255
Fiscal 2029 1,811
Thereafter 24,035
Total $ 35,319
The Company’s unsecured notes are issued under indentures that generally have similar terms and, therefore, have been grouped by maturity date for presentation purposes in the table above. The notes contain certain restrictive covenants, none of which are expected to impact the Company’s capital resources or liquidity. The Company was in compliance with all financial covenants of these agreements as of January 31, 2025.
During 2023, the Company issued $3.0 billion of unsecured fixed rate notes (collectively, the 2023 Notes) as follows:
Issue Date Principal Amount
(in millions) Maturity Date Interest Rate Discount
(in millions)
March 2023 $ 1,000 April 2026 4.800% $ 3
March 2023 $ 1,000 July 2033 5.150% $ 4
March 2023 $ 500 July 2053 5.750% $ 5
March 2023 $ 500 April 2063 5.850% $ 5
Interest on the 2023 Notes with April maturity dates is payable semiannually in arrears in April and October of each year until maturity. Interest on the 2023 Notes with July maturity dates is payable semiannually in arrears in January and July of each year until maturity.
The indenture governing the 2023 Notes contains a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued interest, if any, up to the date of redemption. The indenture also contains a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% of the principal amount, plus accrued interest, if any, on such notes up to the date of purchase. The indenture governing the notes does not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity. However, the indenture includes various restrictive covenants, none of which is expected to impact the Company’s liquidity or capital resources.
The discounts associated with these issuances, which include the underwriting and issuance discounts, are recorded in long-term debt and are being amortized over the respective terms of the notes using the effective interest method.
NOTE 8: Derivative Instruments
The notional amounts of the Company’s material derivative instruments are as follows:
(In millions) January 31, 2025 February 2, 2024
Fair value hedges:
Fixed-to-floating interest rate swap agreements $ 850 $ 850
See Note 3 for the gross fair values of the Company’s outstanding derivative financial instruments and corresponding fair value classifications. The cash flows related to settlement of the Company’s hedging derivatives financial instruments are classified in the consolidated statements of cash flows based on the nature of the underlying hedged items.
The Company accounts for the fixed-to-floating interest rate swap agreements as fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective. Thus, the change in fair value of the derivative instruments offsets the change in fair value on the hedged debt, and there is no net impact in the consolidated statements of earnings from the fair value of the derivatives.
In connection with the issuance of our 2023 Notes, we settled forward interest rate swap contracts with a combined notional amount of $2.0 billion and received a payment of $247 million. In connection with the issuance of the March 2022 Notes, the Company settled forward interest rate swap contracts with a combined notional amount of $1.5 billion and received a payment of $143 million. In connection with the issuance of the September 2022 Notes, the Company settled forward interest rate swap contracts with a combined notional amount of $1.3 billion and received a payment of $136 million. The (loss)/gain from forward interest rate swap derivatives, both matured and outstanding, designated as cash flow hedges recorded in other comprehensive (loss)/income and earnings for 2024, 2023, and 2022, including its line item in the financial statements, is as follows:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Other comprehensive (loss)/income:
Cash flow hedges - net of tax benefit/(expense) of $4 million, $5 million, and ($102) million, respectively
$ (13) $ (14) $ 311
Net earnings:
Interest - net $ 17 $ 15 $ 1
NOTE 9: Shareholders’ Deficit
Authorized shares of preferred stock were 5.0 million ($5 par value) as of January 31, 2025, and February 2, 2024, none of which have been issued. The Board of Directors may issue the preferred stock (without action by shareholders) in one or more series, having such voting rights, dividend and liquidation preferences, and such conversion and other rights as may be designated by the Board of Directors at the time of issuance.
Authorized shares of common stock were 5.6 billion ($0.50 par value) as of January 31, 2025, and February 2, 2024.
The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private off-market transactions. Shares purchased under the repurchase program are returned to authorized and unissued status. On December 7, 2022, the Company announced that its Board of Directors authorized $15.0 billion of share repurchases under the program. As of January 31, 2025, the Company had $10.8 billion remaining under the program.
During the year ended January 31, 2025, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 6.1 million shares of the Company’s common stock for $1.5 billion. At inception, the Company paid the financial institutions using cash on hand and took initial delivery of shares. Under the terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of shares the Company would be required to deliver.
The final number of shares received upon settlement of each ASR agreement was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares under these agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.
These ASR agreements were accounted for as treasury stock transactions and forward stock purchase contracts. The par value of the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in excess of par value and accumulated deficit. The forward stock purchase contracts were considered indexed to the Company’s own stock and were classified as equity instruments.
The terms of each ASR agreement entered into during the last three fiscal years, structured as outlined above, are as follows (in millions):
Agreement Execution Date ASR Settlement Date ASR Agreement Amount Initial Shares Delivered Additional Shares Delivered at Settlement Total Shares Delivered
Q1 2022 Q1 2022 750 2.8 0.6 3.4
Q2 2022 Q2 2022 1,750 7.5 2.1 9.6
Q3 2022 Q3 2022 2,250 8.3 3.3 11.6
Q4 2022 Q4 2022 530 2.0 0.6 2.6
Q1 2023 Q1 2023 750 3.1 0.7 3.8
Q2 2023 Q2 2023 1,000 3.9 0.7 4.6
Q3 2023 Q3 2023 1,500 5.3 1.7 7.0
Q1 2024 Q1 2024 325 1.1 0.2 1.3
Q2 2024 Q2 2024 375 1.4 0.3 1.7
Q3 2024 Q3 2024 400 1.3 0.2 1.5
Q4 2024 Q4 2024 400 1.2 0.4 1.6
During the year ended January 31, 2025, the Company also repurchased shares of its common stock through the open market totaling 9.3 million shares for a cost of $2.3 billion.
The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of restricted stock awards and performance share units.
Total shares repurchased for 2024, 2023, and 2022 were as follows:
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
(In millions) Shares Cost Shares Cost Shares Cost
Share repurchase program1
15.4 $ 3,834 29.2 $ 6,199 70.6 $ 14,004
Shares withheld from employees 0.4 94 0.7 135 0.6 124
Total share repurchases 15.8 $ 3,928 29.9 $ 6,334 71.2 $ 14,128
1 As of January 1, 2023, share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired.
NOTE 10: Share-Based Payments
Overview of Share-Based Payment Plans
The Company has an active equity incentive plan (the Incentive Plan) under which the Company has been authorized to grant share-based awards to key employees and non-employee directors. The Company also has an employee stock purchase plan (the ESPP) that allows employees to purchase Company shares at a discount through payroll deductions. Both of these plans contain a non-discretionary anti-dilution provision that is designed to equalize the value of an award as a result of any stock dividend, stock split, recapitalization, or any other similar equity restructuring.
A total of 80.0 million shares were authorized for grants of share-based awards to key employees and non-employee directors under the Company’s currently active Incentive Plan, of which there were 23.5 million shares remaining available for grants as of January 31, 2025. The 2020 Employee Stock Purchase Plan (the ESPP) permits a maximum of 20.0 million shares to be offered for purchase. As of January 31, 2025, there were 17.5 million shares remaining available for purchase.
The Company recognized share-based payment expense within SG&A expense in the consolidated statements of earnings of $221 million, $210 million, and $224 million in 2024, 2023, and 2022, respectively. The total associated income tax benefit recognized, exclusive of excess tax benefits, was $42 million, $30 million, and $36 million in 2024, 2023, and 2022, respectively.
Total unrecognized share-based payment expense for all share-based payment plans was $281 million as of January 31, 2025, of which $163 million will be recognized in 2025, $101 million in 2026, and $17 million thereafter. This results in these amounts being recognized over a weighted-average period of 1.4 years.
For all share-based payment awards, the expense recognized has been adjusted for estimated forfeitures where the requisite service is not expected to be met. Estimated forfeiture rates are developed based on the Company’s analysis of historical forfeiture data for homogeneous employee groups.
General terms and methods of valuation for the Company’s share-based awards are as follows:
Stock Options
Stock options have terms of 10 years, with one-third of each grant vesting each year for three years, subsequent to the date of the grant, and are assigned an exercise price equal to the closing market price of a share of the Company’s common stock on the date of grant. Options are expensed on a straight-line basis over the grant vesting period, which is considered to be the requisite service period.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options is based on the Company’s evaluation of option holders’ exercise patterns and represents the period of time that options are expected to remain unexercised. The Company uses historical data to estimate the timing and amount of forfeitures. The weighted average assumptions used in the Black-Scholes option-pricing model and weighted-average grant date fair value for options granted in 2024, 2023, and 2022 are as follows:
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Weighted-average assumptions used:
Expected volatility 31.6 % 32.2 % 30.7 %
Dividend yield 1.79 % 1.74 % 1.66 %
Risk-free interest rate 4.33 % 3.59 % 2.56 %
Expected term, in years 7.00 6.50 6.51
Weighted-average grant date fair value $ 84.76 $ 64.41 $ 58.66
The total intrinsic value of options exercised, representing the difference between the exercise price and the market price on the date of exercise, was approximately $45 million, $28 million, and $41 million in 2024, 2023, and 2022, respectively.
Transactions related to stock options for the fiscal year ended January 31, 2025, are summarized as follows:
(in thousands, except per share and years data) Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Term Aggregate Intrinsic Value
Outstanding as of February 2, 2024 1,830 $ 136.74
Granted 117 249.28
Canceled, forfeited or expired (10) 200.73
Exercised (312) 106.62
Outstanding as of January 31, 2025 1,625 $ 150.23 5.84 $ 178,457
Vested and expected to vest as of January 31, 20251
1,613 $ 149.69 5.82 $ 177,957
Exercisable as of January 31, 2025 1,249 $ 130.47 5.11 $ 161,887
1 Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied.
Restricted Stock Awards
Restricted stock awards are valued at the market price of a share of the Company’s common stock on the date of grant. In general, these awards vest ratably over a three-year period from the date of grant. Certain awards vest 50% at the end of a two-
year period from the date of grant and 50% at the end of a three-year period from the date of grant, or vest 100% at the end of a three-year period from the date of grant. All awards are expensed on a straight-line basis over a three-year period, which is considered to be the requisite service period. The Company uses historical data to estimate the timing and amount of forfeitures. The weighted-average grant-date fair value per share of restricted stock awards granted was $249.31, $201.78, and $201.10 in 2024, 2023, and 2022, respectively. The total fair value of restricted stock awards vesting each year was approximately $158 million, $208 million, and $203 million in 2024, 2023, and 2022, respectively.
Transactions related to restricted stock awards for the fiscal year ended January 31, 2025, are summarized as follows:
(in thousands, except per share data) Shares Weighted-Average Grant-Date Fair Value Per Share
Nonvested as of February 2, 2024 1,378 $ 199.88
Granted 663 249.31
Vested (635) 198.05
Canceled or forfeited (129) 222.85
Nonvested as of January 31, 2025 1,277 $ 224.15
Deferred Stock Units
Deferred stock units are valued at the market price of a share of the Company’s common stock on the date of grant and earn dividend equivalents. For non-employee Directors, these awards vest on the earlier of the first anniversary of the grant date and the day immediately preceding the next Annual Meeting of Shareholders, subject to acceleration in certain circumstances, and are expensed on a straight-line basis over the requisite service period. Awards granted prior to 2022 vested immediately and were expensed on the grant date. Deferred stock units granted to non-employee Directors in 2024, 2023, and 2022 are as follows:
Years Ended
(In thousands, except per share data) January 31, 2025 February 2, 2024 February 3, 2023
Deferred shares granted to non-employee Directors 12 11 12
Weighted-average grant date fair value per share $ 221.29 $ 206.52 $ 200.27
Performance Share Units
The Company issues performance share units classified as equity awards. Expense is recognized on a straight-line basis over the requisite service period, based on the probability of achieving the performance condition, with changes in expectations recognized as an adjustment to earnings in the period of the change. Compensation cost is not recognized for performance share units that do not vest because service or performance conditions are not satisfied, and any previously recognized compensation cost is reversed. Performance share units do not have dividend rights. The Company uses historical data to estimate the timing and amount of forfeitures.
The Company’s performance share units contain performance and service conditions that must be satisfied for an employee to earn the right to benefit from the award, as well as a market condition modifier. The performance condition for these awards continues to be based primarily on the achievement of the Company’s return on invested capital (ROIC) targets. The market condition is based on the Company’s total shareholder return (TSR) compared to the median TSR of companies listed in the S&P 500 Index over a three-year performance period. The Company uses a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining to the TSR market condition.
The weighted-average assumptions used in the Monte Carlo simulations for these awards granted in 2024, 2023, and 2022 are as follows:
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Weighted-average assumptions used:
Expected volatility 27.1 % 29.3 % 37.1 %
Dividend yield 1.77 % 2.10 % 1.58 %
Risk-free interest rate 4.49 % 3.83 % 2.54 %
Expected term, in years 2.83 2.82 2.84
In general, 0% to 200% of the Company’s performance share units vest at the end of a three-year service period from the date of grant based upon achievement of the performance condition, or a combination of the performance and market conditions, specified in the performance share unit agreement.
The weighted-average grant-date fair value per unit of performance share units classified as equity awards granted was $273.37, $209.50, and $200.06 in 2024, 2023, and 2022, respectively. The total fair value of performance share units vesting was approximately $55 million, $105 million and $74 million in 2024, 2023 and 2022, respectively.
Transactions related to performance share units classified as equity awards for the fiscal year ended January 31, 2025, are summarized as follows:
(in thousands, except per share data) Units1
Weighted-Average Grant-Date Fair Value Per Unit
Nonvested as of February 2, 2024 437 $ 206.23
Granted 152 273.37
Vested (120) 208.72
Canceled or forfeited (15) 225.08
Nonvested as of January 31, 2025 454 $ 227.46
1 The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of January 31, 2025, the maximum number of nonvested units that could vest under the provisions of the agreements was 0.9 million.
Restricted Stock Units
Restricted stock units do not have dividend rights and are valued at the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period. In general, these awards vest ratably over a three-year period from the date of grant. Certain awards vest 50% at the end of a two-year period from the date of grant and 50% at the end of a three-year period from the date of grant, or vest 100% at the end of a three-year period from the date of grant. All awards are expensed on a straight-line basis over that period, which is considered to be the requisite service period. The Company uses historical data to estimate the timing and amount of forfeitures. The weighted-average grant-date fair value per share of restricted stock units granted was $236.96, $188.22, and $192.46 in 2024, 2023, and 2022, respectively. The total fair value of restricted stock units vesting was approximately $56 million, $67 million, and $73 million in 2024, 2023, and 2022, respectively.
Transactions related to restricted stock units for the fiscal year ended January 31, 2025, are summarized as follows:
(in thousands, except per share data) Shares Weighted-Average Grant-Date Fair Value Per Share
Nonvested as of February 2, 2024 476 $ 188.84
Granted 257 236.96
Vested (223) 188.25
Canceled or forfeited (58) 211.92
Nonvested as of January 31, 2025 452 $ 213.52
ESPP
The purchase price of the shares under the ESPP equals 85% of the closing price on the date of purchase. The Company’s share-based payment expense per share is equal to 15% of the closing price on the date of purchase. The ESPP is considered a liability award and is measured at fair value at each reporting date, and the share-based payment expense is recognized over the six-month offering period. Under the ESPP, the Company issued 0.6 million shares of common stock in 2024, and 0.7 million shares of common stock in 2023 and 2022, and recognized share-based payment expense of $22 million, $21 million, and $20 million in 2024, 2023, and 2022, respectively.
NOTE 11: Employee Retirement Plans
The Company maintains a defined contribution retirement plan for eligible employees (the 401(k) Plan). Eligible employees may participate in the 401(k) Plan the first of the month after thirty days of employment. The Company makes contributions to the 401(k) Plan each payroll period, based upon a matching formula applied to employee deferrals (the Company Match). Participants are eligible to receive the Company Match pursuant to the terms of the 401(k) Plan. The Company Match varies based on how much the employee elects to defer up to a maximum of 4.25% of eligible compensation. The Company Match is invested identically to employee contributions and is immediately vested.
The Company maintains a Benefit Restoration Plan to supplement benefits provided under the 401(k) Plan to participants whose benefits are restricted as a result of certain provisions of the Internal Revenue Code of 1986. This plan provides for employee salary deferrals and employer contributions in the form of a Company Match.
The Company maintains a non-qualified deferred compensation program called the Lowe’s Cash Deferral Plan. This plan is designed to permit certain employees to defer receipt of portions of their compensation, thereby delaying taxation on the deferral amount and on subsequent earnings until the balance is distributed. This plan does not provide for Company contributions.
The Company recognized expense associated with these employee retirement plans of $172 million, $167 million, and $174 million in 2024, 2023, and 2022, respectively.
NOTE 12: Income Taxes
The following is a reconciliation of the federal statutory tax rate to the effective tax rate:
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
Statutory federal income tax rate 21.0 % 21.0 % 21.0 %
State income taxes, net of federal tax benefit 3.7 3.8 4.8
Valuation allowance (0.4) 0.7 5.5
Expiration of capital loss carryforward 0.1 - 2.5
Loss on divestiture of Canadian retail business - (1.0) (4.1)
Other, net (0.4) (0.4) (0.9)
Effective tax rate 24.0 % 24.1 % 28.8 %
The components of the income tax provision/(benefit) are as follows:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Current:
Federal $ 1,764 $ 1,955 $ 2,226
State 424 489 561
Total current1
2,188 2,444 2,787
Deferred:
Federal - 3 (179)
State 8 2 (9)
Total deferred1
8 5 (188)
Total income tax provision $ 2,196 $ 2,449 $ 2,599
1 Amounts applicable to foreign income taxes were insignificant for all periods presented.
The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:
(In millions) January 31, 2025 February 2, 2024
Deferred tax assets:
Self-insurance $ 233 $ 261
Share-based payment expense 46 49
Operating lease liabilities 1,143 1,159
Capital loss carryforwards 645 695
Net operating losses 261 332
Other, net 390 446
Total deferred tax assets 2,718 2,942
Valuation allowance (1,003) (1,133)
Net deferred tax assets 1,715 1,809
Deferred tax liabilities:
Operating lease right-of-use assets (1,012) (1,017)
Property (315) (389)
Other, net (144) (155)
Total deferred tax liabilities (1,471) (1,561)
Net deferred tax assets $ 244 $ 248
As of January 31, 2025, and February 2, 2024, the Company had Canadian net operating loss carryforwards of $1 billion and $1.3 billion, respectively. The net operating losses expire in 2025 through 2042. As of January 31, 2025, and February 2, 2024, the Company had capital loss carryforwards of $2.5 billion and $2.7 billion, respectively, for Canadian tax purposes which do not expire. A valuation allowance of $1.0 billion and $1.1 billion was recorded as of January 31, 2025, and February 2, 2024, respectively.
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Unrecognized tax benefits, beginning of year $ 37 $ 37 $ 38
Additions for tax positions of prior years - - -
Settlements - - (1)
Unrecognized tax benefits, end of year $ 37 $ 37 $ 37
The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate were $37 million as of January 31, 2025, and February 2, 2024.
The net interest expense recognized by the Company related to uncertain tax positions was $1 million for 2024, $1 million for 2023, and $3 million for 2022. The Company had $15 million and $14 million of accrued interest related to uncertain tax positions as of January 31, 2025, and February 2, 2024, respectively.
No penalties were recognized related to uncertain tax positions for 2024, 2023, and 2022. The Company had $4 million of accrued penalties related to uncertain tax positions as of January 31, 2025, and February 2, 2024, respectively.
The Company is subject to examination by various foreign and domestic taxing authorities. There are ongoing U.S. state audits covering tax years 2015 to 2023. Audits performed by the Canada Revenue Agency for fiscal years 2021 and 2022 and the Mexican Tax Administration Service for 2018 are on-going. The Company remains subject to income tax examinations for fiscal years 2015 through 2023. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years.
Note 13: Earnings Per Share
The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and, therefore, are considered to participate in undistributed earnings with common shareholders.
Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards. The following table reconciles earnings per common share for 2024, 2023, and 2022:
Years Ended
(In millions, except per share data) January 31, 2025 February 2, 2024 February 3, 2023
Basic earnings per common share:
Net earnings attributable to Lowe's Companies, Inc. $ 6,957 $ 7,726 $ 6,437
Less: Net earnings allocable to participating securities (17) (20) (21)
Net earnings allocable to common shares, basic $ 6,940 $ 7,706 $ 6,416
Weighted-average common shares outstanding 567 582 629
Basic earnings per common share $ 12.25 $ 13.23 $ 10.20
Diluted earnings per common share:
Net earnings attributable to Lowe's Companies, Inc. $ 6,957 $ 7,726 $ 6,437
Less: Net earnings allocable to participating securities (17) (20) (21)
Net earnings allocable to common shares, diluted $ 6,940 $ 7,706 $ 6,416
Weighted-average common shares outstanding 567 582 629
Dilutive effect of non-participating share-based awards 1 2 2
Weighted-average common shares, as adjusted 568 584 631
Diluted earnings per common share $ 12.23 $ 13.20 $ 10.17
Anti-dilutive securities excluded from diluted weighted-average common shares 0.1 0.5 0.5
NOTE 14: Commitments and Contingencies
The Company is, from time to time, party to various legal proceedings considered to be in the normal course of business, none of which, individually or in the aggregate, are expected to be material to the Company’s financial statements. In evaluating liabilities associated with its various legal proceedings, the Company has accrued for probable liabilities associated with these
matters. The amounts accrued were not material to the Company’s consolidated financial statements in any of the years presented. Reasonably possible losses for any of the individual legal proceedings which have not been accrued were not material to the Company’s consolidated financial statements.
As of January 31, 2025, the Company had non-cancellable commitments of $2.3 billion related to certain marketing and information technology programs, and purchases of merchandise inventory. These commitments include agreements to purchase goods or services that are enforceable, are legally binding, and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Payments under these commitments are scheduled to be made as follows:
(In millions) Commitments
Fiscal 2025 $ 965
Fiscal 2026 693
Fiscal 2027 342
Fiscal 2028 105
Fiscal 2029 83
Thereafter 118
Total $ 2,306
As of January 31, 2025, the Company held standby and documentary letters of credit issued under banking arrangements which totaled $488 million. The majority of the Company’s letters of credit were issued to support the Company’s warranty program.
NOTE 15: Related Parties
The Company’s President and Chief Executive Officer also serves on the Board of Directors of a vendor that provides transportation and business services to the Company. The Company purchased services from this vendor in the amount of $240 million in 2024, $217 million in 2023, and $228 million in 2022. Amounts payable to this vendor were insignificant to the Company as of January 31, 2025, and February 2, 2024.
NOTE 16: Other Information
Interest - net is comprised of the following:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Long-term debt $ 1,452 $ 1,438 $ 1,108
Finance lease obligations 23 24 29
Short-term borrowings - 15 5
Interest income (159) (101) (37)
Interest capitalized (6) (4) (4)
Interest on tax uncertainties 1 1 3
Other 2 9 19
Interest - net $ 1,313 $ 1,382 $ 1,123
Supplemental disclosures of cash flow information:
Years Ended
(In millions) January 31, 2025 February 2, 2024 February 3, 2023
Cash paid for interest, net of amount capitalized $ 1,475 $ 1,464 $ 976
Cash paid for income taxes, net $ 1,648 $ 3,700 $ 1,720
Non-cash investing and financing activities:1
Cash dividends declared but not paid $ 645 $ 633 $ 633
1See Note 5 for supplemental cash flow disclosures related to finance and operating leases.
Sales by product category:
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
(In millions, except percentage data) Total Sales % Total Sales % Total Sales %
Appliances $ 12,053 14.4 % $ 12,326 14.3 % $ 13,486 13.9 %
Seasonal & Outdoor Living 7,370 8.8 7,686 8.9 8,657 8.9
Lumber 6,747 8.1 7,021 8.1 9,767 10.1
Lawn & Garden 6,526 7.8 6,718 7.8 6,917 7.1
Kitchens & Bath 5,869 7.0 6,178 7.2 6,969 7.2
Hardware 5,821 7.0 5,848 6.8 6,188 6.4
Building Materials 5,419 6.5 5,255 6.1 5,074 5.2
Millwork 4,986 6.0 5,180 6.0 5,769 5.9
Paint 4,976 5.9 5,117 5.9 5,405 5.6
Rough Plumbing 4,930 5.9 5,013 5.8 5,376 5.5
Tools 4,539 5.4 4,703 5.4 5,162 5.3
Electrical 4,299 5.1 4,479 5.2 5,336 5.5
Flooring 4,102 4.9 4,359 5.0 5,077 5.2
Décor 3,862 4.6 4,156 4.8 5,274 5.4
Other 2,175 2.6 2,338 2.7 2,602 2.8
Net sales $ 83,674 100.0 % $ 86,377 100.0 % $ 97,059 100.0 %
Note: Product category sales for prior periods have been reclassified to conform to the current year presentation.
NOTE 17: Segment Information
The Company’s home improvement operations represent a single operating segment designed to enable customers to purchase products and services seamlessly through all channels. The Company’s chief operating decision maker (CODM) is the Chairman, President, and Chief Executive Officer. The CODM has the ultimate decision-making authority for resource allocation and assessing the performance of the Company. Thereby, the CODM regularly reviews consolidated net earnings as the measure of segment profit or loss, as well as significant segment expenses included in the below table, to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. The CODM also uses these measures in monitoring plan versus actual results. The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets.
The following presents the Company’s operating results, including significant segment expenses.
Years Ended
January 31, 2025 February 2, 2024 February 3, 2023
(In millions, except percentage data) Amount % Sales Amount % Sales Amount % Sales
Net sales $ 83,674 100.00 % $ 86,377 100.00 % $ 97,059 100.00 %
Less:
Cost of sales 55,797 66.68 57,533 66.61 64,802 66.77
Selling, general and administrative:
Employee compensation and benefits 10,830 12.94 10,801 12.50 12,059 12.42
Occupancy and facility costs 1,897 2.27 1,836 2.13 2,127 2.19
Advertising 921 1.10 831 0.96 869 0.90
Impairment and (gain)/loss on sale of Canadian retail business (169) (0.20) (57) (0.07) 2,536 2.61
Other SG&A items1
2,203 2.63 2,159 2.50 2,741 2.82
Depreciation and amortization 1,729 2.07 1,717 1.99 1,766 1.82
Interest - net 1,313 1.57 1,382 1.60 1,123 1.16
Income tax provision 2,196 2.63 2,449 2.83 2,599 2.68
Net earnings $ 6,957 8.31 % $ 7,726 8.95 % $ 6,437 6.63 %
1 Other SG&A items primarily include financial services costs, technology service costs, insurance costs, and store environment initiative and display costs.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A - Controls and Procedures
The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s “disclosure controls and procedures”, (as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the Exchange Act)). Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Annual Report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the SEC) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management’s report on internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) and the report of Deloitte & Touche LLP, the Company’s independent registered public accounting firm, are included in Item 8 of this Annual Report.
The Company is undergoing a multi-year technology transformation which includes updating and modernizing our merchandise selling system, as well as certain accounting and finance systems. These updates are expected to continue for the next few years, and management will continue to evaluate the design and implementation of the Company’s internal controls over financial reporting as the transformation continues. No change in the Company’s internal control over financial reporting occurred during the fiscal fourth quarter ended January 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B - Other Information
On March 20, 2025, Marvin R. Ellison, the Company’s Chairman, President and Chief Executive Officer, adopted a trading plan intended to satisfy Rule 10b5-1(c) under the Securities Exchange Act of 1934, to sell up to 58,000 shares of the Company’s common stock over a period ending on May 29, 2026, subject to certain conditions, including an initial cooling off period before any sales can commence. After the contemplated sales, which Mr. Ellison has stated are for estate planning purposes, Mr. Ellison will continue to have a significant stake in the Company, with the shares subject to the trading plan representing less than 8% of the Company shares beneficially owned by Mr. Ellison, as determined under SEC rules, as well as holding additional performance share units, stock options, and restricted stock awards that remain subject to vesting over the course of his continued employment pursuant to the terms of the awards.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10 - Directors, Executive Officers and Corporate Governance
The information required by this item with respect to our executive officers appears in Part I of this Annual Report under the heading, “Information About Our Executive Officers”. The other information required by this item is furnished by incorporation by reference to the information under the headings “Proposal 1: Election of Directors”, “Corporate Governance”, “Additional Information - Shareholder Proposals for the 2026 Annual Meeting”, and “Compensation Discussion and Analysis - Other Compensation Policies - Trading in Company Securities” in the definitive Proxy Statement for the 2025 annual meeting of shareholders, which will be filed with the SEC within 120 days after the fiscal year ended January 31, 2025 (the Proxy Statement).
We have adopted a written code of business conduct and ethics, which is intended to qualify as a “code of ethics” within the meaning of Item 406 of Regulation S-K of the Exchange Act, which we refer to as the Lowe’s Code of Business Conduct and Ethics (the Code). The Code applies to all employees of the Company, including our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions. The Code is designed to ensure that the Company’s business is conducted in a legal and ethical manner. The Code covers all areas of professional conduct, including compliance with laws and regulations, conflicts of interest, fair dealing among customers and suppliers, corporate opportunity, confidential information, insider trading, employee relations, and accounting complaints. The full text of the Code can be found on our website at ir.lowes.com, under the “Investors”, and “Corporate Governance - Governance Documents” headings. You can also obtain a copy of the complete Code by contacting Investor Relations by phone at 1-800-813-7613 or email at investorrelations@lowes.com.
We will disclose information pertaining to amendments or waivers to provisions of the Code that apply to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions and that relate to any element of the Code enumerated in the SEC rules and regulations by posting this information on our website at ir.lowes.com. The information on our website is not a part of this Annual Report and is not incorporated by reference in this report or any of our other filings with the SEC.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11 - Executive Compensation
The information required by this item is furnished by incorporation by reference to the information under the headings “Corporate Governance - Compensation of Directors”, “Compensation Discussion and Analysis”, “Compensation Tables”, and “Compensation Committee Interlocks and Insider Participation” in the Proxy Statement, except as to information required pursuant to Item 402(v) of SEC Regulation S-K relating to pay versus performance.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is furnished by incorporation by reference to the information under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in the Proxy Statement.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13 - Certain Relationships and Related Transactions, and Director Independence
The information required by this item is furnished by incorporation by reference to the information under the headings “Corporate Governance - Director Independence”, “Related Person Transactions”, and “Appendix B: Categorical Standards for Determination of Director Independence” in the Proxy Statement.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14 - Principal Accountant Fees and Services
The information required by this item is furnished by incorporation by reference to the information under the heading “Audit Matters - Fees Paid to the Independent Registered Public Accounting Firm” in the Proxy Statement.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15 - Exhibits and Financial Statement Schedules
1. Financial Statements
See the following items and page numbers appearing in Item 8 of this Annual Report:
Page No.
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Earnings for each of the three fiscal years in the period ended January 31, 2025
Consolidated Statements of Comprehensive Income for each of the three fiscal years in the period ended January 31, 2025
Consolidated Balance Sheets as of January 31, 2025 and February 2, 2024
Consolidated Statements of Shareholders’ Deficit for each of the three fiscal years in the period ended January 31, 2025
Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended January 31, 2025
Notes to Consolidated Financial Statements for each of the three fiscal years in the period ended January 31, 2025
2. Financial Statement Schedules
All schedules have not been included as they are either not applicable or the information is included within our consolidated financial statements and notes to the consolidated financial statements.
3. Exhibits
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
3.1 Restated Charter of Lowe’s Companies, Inc.
10-Q 001-07898 3.1 September 1, 2009
3.2 Bylaws of Lowe’s Companies, Inc., as amended and restated November 11, 2022.
8-K 001-07898 3.1 November 16, 2022
4.1 Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee.
8-K 001-07898 4.1 December 15, 1995
4.2 Form of Lowe’s Companies, Inc.’s 6 7/8% Debentures due February 15, 2028.
8-K 001-07898 4.2 February 20, 1998
4.3 First Supplemental Indenture, dated as of February 23, 1999, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee.
10-K 001-07898 10.13 April 19, 1999
4.4 Form of Lowe’s Companies, Inc.’s 6 1/2% Debentures due March 15, 2029.
10-K 001-07898 10.19 April 19, 1999
4.5 Third Supplemental Indenture, dated as of October 6, 2005, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as an exhibit thereto a form of Lowe’s Companies, Inc.’s 5.5% Notes maturing in October 2035.
10-K 001-07898 4.5 April 3, 2007
4.6 Fourth Supplemental Indenture, dated as of October 10, 2006, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as an exhibit thereto a form of Lowe’s Companies, Inc.’s 5.80% Notes maturing in October 2036.
S-3 (POSASR) 333-137750 4.5 October 10, 2006
4.7 Fifth Supplemental Indenture, dated as of September 11, 2007, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 6.10% Notes maturing in September 2017 and a form of Lowe’s Companies, Inc.’s 6.65% Notes maturing in September 2037.
8-K 001-07898 4.1 September 11, 2007
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
4.8 Sixth Supplemental Indenture, dated as of April 15, 2010, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 4.625% Notes maturing in April 2020 and a form of Lowe’s Companies, Inc.’s 5.800% Notes maturing in April 2040.
8-K 001-07898 4.1 April 15, 2010
4.9 Eighth Supplemental Indenture, dated as of November 23, 2011, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 3.800% Notes maturing in November 2021 and a form of Lowe’s Companies, Inc.’s 5.125% Notes maturing in November 2041.
8-K 001-07898 4.1 November 23, 2011
4.10 Ninth Supplemental Indenture, dated as of April 23, 2012, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 1.625% Notes maturing in April 2017, a form of Lowe’s Companies, Inc.’s 3.120% Notes maturing in April 2022 and a form of Lowe’s Companies, Inc.’s 4.650% Notes maturing in April 2042.
8-K 001-07898 4.1 April 23, 2012
4.11 Tenth Supplemental Indenture, dated as of September 11, 2013, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 3.875% Notes maturing in September 2023 and a form of Lowe’s Companies, Inc.’s 5.000% Notes maturing in September 2043.
8-K 001-07898 4.1 September 11, 2013
4.12 Eleventh Supplemental Indenture, dated as of September 10, 2014, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s Floating Rate Notes maturing in September 2019, a form of Lowe’s Companies, Inc.’s 3.125% Notes maturing in September 2024 and a form of Lowe’s Companies, Inc.’s 4.250% Notes maturing in September 2044.
8-K 001-07898 4.1 September 10, 2014
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
4.13 Twelfth Supplemental Indenture, dated as of September 16, 2015, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s Floating Rate Notes maturing in September 2018, a form of Lowe’s Companies, Inc.’s 3.375% Notes maturing in September 2025 and a form of Lowe’s Companies, Inc.’s 4.375% Notes maturing in September 2045.
8-K 001-07898 4.1 September 16, 2015
4.14 Thirteenth Supplemental Indenture, dated as of April 20, 2016, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and U.S. Bank National Association, as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s Floating Rate Notes maturing in April 2019, a form of Lowe’s Companies, Inc.’s 1.15% Notes maturing in April 2019, a form of Lowe’s Companies, Inc.’s 2.50% Notes maturing in April 2026 and a form of Lowe’s Companies, Inc.’s 3.70% Notes maturing in April 2046.
8-K 001-07898 4.1 April 20, 2016
4.15 Fourteenth Supplemental Indenture, dated as of May 3, 2017, between Lowe’s Companies, Inc. and U.S. Bank National Association, as successor trustee, including as exhibits thereto a form of 3.100% Notes due May 3, 2027 and a form of 4.050% Notes due May 3, 2047.
8-K 001-07898 4.1 May 3, 2017
4.16 Fifteenth Supplemental Indenture, dated as of April 5, 2019, between Lowe’s Companies, Inc. and U.S. Bank National Association (as successor trustee), including as exhibits thereto a form of 3.650% Notes due April 5, 2029 and a form of 4.550% Notes due April 5, 2049.
8-K 001-07898 4.2 April 5, 2019
4.17 Sixteenth Supplemental Indenture, dated as of March 26, 2020, between Lowe’s Companies, Inc. and U.S. Bank National Association (as successor trustee), including as exhibits thereto a form of 4.000% Notes due April 15, 2025, a form of 4.500% Notes due April 15, 2030, a form of 5.000% Notes due April 15, 2040 and a form of 5.125% Notes due April 15, 2050.
8-K 001-07898 4.2 March 27, 2020
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
4.18 Seventeenth Supplemental Indenture, dated as of October 22, 2020, between Lowe’s Companies, Inc. and U.S. Bank National Association (as successor trustee), including as exhibits thereto a form of 1.300% Notes due April 15, 2028, a form of 1.700% Notes due October 15, 2030 and a form of 3.000% Notes due October 15, 2050.
8-K 001-07898 4.2 October 22, 2020
4.19 Eighteenth Supplemental Indenture, dated as of March 31, 2021, between Lowe’s Companies, Inc. and U.S. Bank National Association (as successor trustee), including as exhibits thereto a form of 2.625% Notes due April 1, 2031 and a form of 3.500% Notes due April 1, 2051.
8-K 001-07898 4.2 March 31, 2021
4.20 Nineteenth Supplemental Indenture, dated as of September 20, 2021, between Lowe’s Companies, Inc. and U.S. Bank Association (as successor trustee), including as exhibits thereto a form of 1.700% Notes due September 15, 2028 and a form of 2.800% Notes due September 15, 2041.
8-K 001-07898 4.2 September 20, 2021
4.21 Twentieth Supplemental Indenture, dated as of March 24, 2022, between Lowe’s Companies, Inc. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association as successor trustee). including as exhibits thereto a form of 3.350% Notes due April 1, 2027, a form of 3.750% Notes due April 1, 2032, a form of 4.250% notes due April 1, 2052 and a form of 4.450% Notes due April 1, 2062.
8-K 001-07898 4.2 March 24, 2022
4.22 Twenty-First Supplemental Indenture, dated as of September 8, 2022, between Lowe’s Companies, Inc. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association as successor trustee). including as exhibits thereto a form of 4.400% Notes due September 8, 2025, a form of 5.000% Notes due April 15, 2033, a form of 5.625% notes due April 15, 2053 and a form of 5.800% Notes due September 15, 2062.
8-K 001-07898 4.2 September 8, 2022
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
4.23 Twenty-Second Supplemental Indenture, dated as of March 30, 2023, between Lowe’s Companies, Inc. and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association as successor trustee). including as exhibits thereto a form of 4.800% Notes due April 1, 2026, a form of 5.150% Notes due July 1, 2033, a form of 5.750% notes due July 1, 2053 and a form of 5.850% Notes due April 1, 2063.
8-K 001-07898 4.2 March 30, 2023
4.24 Third Amended and Restated Credit Agreement, dated as of December 14, 2021, by and among Lowe’s Companies, Inc., Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer, U.S. Bank National Association and Wells Fargo Bank. National Association, as co-syndication agents and letter of credit issuers, and Citibank, N.A., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A. and Barclays Bank PLC, as co-documentation agents, and the other lenders party thereto.
8-K 001-07898 10.1 December 15, 2021
4.25 Amendment No. 1 to Third Amended and Restated Credit Agreement, dated as of January 17, 2023, by and among Lowe’s Companies, Inc., Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer, and the other lenders party thereto.
8-K 001-07898 10.1 January 23, 2023
4.26 Amended and Restated Credit Agreement, dated as of September 1, 2023, by and among Lowe’s Companies, Inc., Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer, U.S. Bank National Association and Wells Fargo Bank, National Association, as co-syndication agents and letter of credit issuers, Citibank, N.A., Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A. and Barclays Bank PLC, as co-documentation agents, and the other lenders party thereto.
8-K 001-07898 10.1 September 7, 2023
4.27 Description of Securities.
10-K 001-07898 4.27 March 25, 2024
10.1 Lowe’s Companies, Inc. Directors’ Deferred Compensation Plan, as amended and restated May 28, 2021.*
10-Q 001-07898 10.1 August 26, 2021
10.2 Lowe’s Companies, Inc. 2020 Employee Stock Purchase Plan.*
S-8 333-249586 99.1 October 21, 2020
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
10.3 Lowe’s Companies Benefit Restoration Plan, as amended and restated as of January 1, 2025.*‡
10.4 Lowe’s Companies, Inc. Cash Deferral Plan, as amended and restated as of January 1, 2025.*‡
10.5 Form of Lowe’s Companies, Inc. Deferred Stock Unit Agreement for Outside Directors.*
10-Q 001-07898 10.1 September 3, 2019
10.6 Form of Lowe’s Companies, Inc. Deferred Stock Unit Agreement for Nonemployee Directors.*
10-Q 001-07898 10.2 August 25, 2022
10.7 Form of Lowe’s Companies, Inc. Deferred Stock Unit Agreement for Nonemployee Directors.*
10-Q 001-07898 10.1 August 30, 2023
10.8 Lowe’s Companies, Inc. 2006 Long Term Incentive Plan, as amended and restated effective as of May 27, 2022.*
8-K 001-07898 10.1 June 2, 2022
10.9 Lowe’s Companies, Inc. 2016 Annual Incentive Plan, effective as of February 1, 2016.*
DEF 14A 001-07898 Appendix C April 11, 2016
10.10 Offer Letter between Marvin R. Ellison and Lowe’s Companies, Inc. entered into on May 21, 2018.*
8-K 001-07898 10.1 May 22, 2018
10.11 Offer Letter between Lowe’s Companies, Inc. and Joseph M. McFarland III entered into on July 18, 2018.*
10-Q 001-07898 10.2 September 4, 2018
10.12 Offer Letter between Lowe’s Companies, Inc. and William P. Boltz entered into on July 15, 2018.*
10-K 001-07898 10.20 March 21, 2022
10.13 Offer Letter between Lowe’s Companies, Inc. and Seemantini Godbole entered into on October 30, 2018.*
10-K 001-07898 10.21 March 21, 2022
10.14 Offer Letter between Lowe’s Companies, Inc. and Brandon J. Sink entered into on April 8, 2022.*
8-K 001-07898 10.1 April 8, 2022
10.15 Offer Letter between Lowe’s Companies, Inc. and Juliette W. Pryor entered into on March 15, 2023.*‡
10-K 001-07898 10.24 March 25, 2024
10.16 Form of Lowe’s Companies, Inc. Restricted Stock Award Agreement for Tier I Officers.*
10-K 001-07898 10.28 March 23, 2020
10.17 Form of Lowe’s Companies, Inc. Performance Share Unit Award Agreement for Tier I Officers.*
10-Q 001-07898 10.2 June 3, 2019
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
10.18 Form of Lowe’s Companies, Inc. Non-Qualified Stock Option Agreement for Tier I Officers.*
10-Q 001-07898 10.6 June 3, 2019
10.19 Form of Lowe’s Companies, Inc. Change in Control Agreement for Tier I Senior Officers.*
10-Q 001-07898 10.7 September 4, 2018
10.20 Form of Lowe’s Companies, Inc. Performance Share Unit Award Agreement.*
10-Q 001-07898 10.1 November 25, 2020
10.21 Form of Lowe’s Companies, Inc. Non-Qualified Stock Option Agreement.*
10-Q 001-07898 10.2 May 28, 2020
10.22 Form of Lowe’s Companies, Inc. Director Indemnification Agreement.*
10-Q 001-07898 10.6 December 6, 2018
10.23 Form of Lowe’s Companies, Inc. Officer Indemnification Agreement.*
10-K 001-07898 10.43 April 2, 2019
10.24 Form of Lowe’s Companies, Inc. 2021 Restricted Stock Award Agreement.*
10-Q 001-07898 10.4 May 27, 2021
10.25 Form of Lowe’s Companies, Inc. 2021 Performance Share Unit Award Agreement.*
10-Q 001-07898 10.2 May 27, 2021
10.26 Form of Lowe’s Companies, Inc. 2021 Non-Qualified Stock Option Agreement.*
10-Q 001-07898 10.3 May 27, 2021
10.27 Form of Lowe’s Companies, Inc. 2022 Performance Share Unit Award Agreement.*
10-Q 001-07898 10.2 May 26, 2022
10.28 Lowe’s Companies, Inc. Severance Plan for Senior Officers as amended and restated May 26, 2022.*
10-Q 001-07898 10.1 November 27, 2024
10.29 Form of Lowes Companies, Inc. 2023 Non-Qualified Stock Option Agreement.*
10-Q 001-07898 10.1 June 1, 2023
10.30 Form of Lowes Companies, Inc. 2023 Performance Share Unit Award Agreement.*
10-Q 001-07898 10.2 June 1, 2023
10.31 Form of Lowes Companies, Inc. 2023 Restricted Stock Award Agreement.*
10-Q 001-07898 10.3 June 1, 2023
19.1 Lowe’s Companies, Inc. Insider Trading Policy and Trading Window and Pre-Clearance Policy.‡
21.1 List of Subsidiaries.‡
23.1 Consent of Deloitte & Touche LLP.‡
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
24.1 Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K).‡
31.1 Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
31.2 Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
97.1 Lowe’s Companies, Inc. Rule 10D-1 Compensation Recovery (Clawback) Policy.
10-K 001-07898 97.1 March 25, 2024
97.2 Lowe’s Companies, Inc. Senior Officer Compensation Recovery (Clawback) Policy.
10-K 001-07898 97.2 March 25, 2024
99.1 Lowe’s 401(k) Plan, as amended and restated, executed on July 15, 2024 (filed to include this amendment as an exhibit to the Registration Statement on Form S-8, Registration No.033-29772).
10-Q 001-07898 99.1 August 29, 2024
99.2 Amendment Number 2024-1 (Plan Loans) to the Lowe’s 401(k) Plan, effective as of January 1, 2025 (filed to include this amendment as an exhibit to the Registration Statement on Form S-8, Registration No.033-29772).‡
99.3 Amendment Number 2024-2 (RMDs) to the Lowe’s 401(k) Plan, effective January 1, 2025 (filed to include this amendment as an exhibit to the Registration Statement on Form S-8, Registration No.033-29772).‡
101.INS XBRL Instance Document - the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.‡
Exhibit Number Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
101.SCH XBRL Taxonomy Extension Schema Document.‡
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.‡
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.‡
101.LAB XBRL Taxonomy Extension Label Linkbase Document.‡
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.‡
104 Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101).‡
* Indicates a management contract or compensatory plan or arrangement.
‡ Filed herewith.
† Furnished herewith.