Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Feb. 01, 2019 | Mar. 29, 2019 | Aug. 03, 2018 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | LOWES COMPANIES INC | ||
Entity Central Index Key | 0000060667 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 1, 2019 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --02-01 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 79.2 | ||
Entity Common Stock, Shares Outstanding | 795,922,717 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Income Statement [Abstract] | |||
Net sales | $ 71,309 | $ 68,619 | $ 65,017 |
Cost of sales | 48,401 | 46,185 | 43,343 |
Gross margin | 22,908 | 22,434 | 21,674 |
Expenses: | |||
Selling, general and administrative | 17,413 | 14,444 | 14,375 |
Depreciation and amortization | 1,477 | 1,404 | 1,453 |
Operating income | 4,018 | 6,586 | 5,846 |
Interest - net | 624 | 633 | 645 |
Loss on extinguishment of debt | 0 | 464 | 0 |
Pre-tax earnings | 3,394 | 5,489 | 5,201 |
Income tax provision | 1,080 | 2,042 | 2,108 |
Net earnings | $ 2,314 | $ 3,447 | $ 3,093 |
Basic earnings per common share (in dollars per share) | $ 2.84 | $ 4.09 | $ 3.48 |
Diluted earnings per common share (in dollars per share) | 2.84 | 4.09 | 3.47 |
Cash dividends per share (in dollars per share) | $ 1.85 | $ 1.58 | $ 1.33 |
Consolidated Statements of Ea_2
Consolidated Statements of Earnings (Percents) | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Consolidated Statements of Earnings | |||
Net sales | 100.00% | 100.00% | 100.00% |
Cost of sales | 67.88% | 67.31% | 66.66% |
Gross margin | 32.12% | 32.69% | 33.34% |
Expenses: | |||
Selling, general and administrative | 24.41% | 21.04% | 22.12% |
Depreciation and amortization | 2.07% | 2.05% | 2.23% |
Operating income | 5.64% | 9.60% | 8.99% |
Interest - net | 0.88% | 0.92% | 0.99% |
Loss on extinguishment of debt | 0.00% | 0.68% | 0.00% |
Pre-tax earnings | 4.76% | 8.00% | 8.00% |
Income tax provision | 1.52% | 2.98% | 3.24% |
Net earnings | 3.24% | 5.02% | 4.76% |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | $ 2,314 | $ 3,447 | $ 3,093 |
Foreign currency translation adjustments - net of tax | (221) | 251 | 154 |
Net unrealized investment gain - net of tax | 1 | 0 | 0 |
Other comprehensive income/(loss) | (220) | 251 | 154 |
Comprehensive income | $ 2,094 | $ 3,698 | $ 3,247 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Percents) | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | 3.24% | 5.02% | 4.76% |
Foreign currency translation adjustments - net of tax | (0.30%) | 0.37% | 0.23% |
Net unrealized investment gain - net of tax | 0.00% | 0.00% | 0.00% |
Other comprehensive income/(loss) | (0.30%) | 0.37% | 0.23% |
Comprehensive income | 2.94% | 5.39% | 4.99% |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Feb. 01, 2019 | Feb. 02, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 511 | $ 588 |
Short-term investments | 218 | 102 |
Merchandise inventory - net | 12,561 | 11,393 |
Other current assets | 938 | 689 |
Total current assets | 14,228 | 12,772 |
Property, less accumulated depreciation | 18,432 | 19,721 |
Long-term investments | 256 | 408 |
Deferred income taxes - net | 294 | 168 |
Goodwill | 303 | 1,307 |
Other assets | 995 | 915 |
Total assets | 34,508 | 35,291 |
Current liabilities: | ||
Short-term borrowings | 722 | 1,137 |
Current maturities of long-term debt | 1,110 | 294 |
Accounts payable | 8,279 | 6,590 |
Accrued compensation and employee benefits | 662 | 747 |
Deferred revenue | 1,299 | 1,378 |
Other current liabilities | 2,425 | 1,950 |
Total current liabilities | 14,497 | 12,096 |
Long-term debt, excluding current maturities | 14,391 | 15,564 |
Deferred revenue - extended protection plans | 827 | 803 |
Other liabilities | 1,149 | 955 |
Total liabilities | 30,864 | 29,418 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Preferred stock - $5 par value, none issued | 0 | 0 |
Common stock - $.50 par value; Shares issued and outstanding 801 at February 1, 2019 and 830 at February 2, 2018, respectively | 401 | 415 |
Capital in excess of par value | 0 | 22 |
Retained earnings | 3,452 | 5,425 |
Accumulated other comprehensive income/(loss) | (209) | 11 |
Total shareholders’ equity | 3,644 | 5,873 |
Total liabilities and shareholders’ equity | $ 34,508 | $ 35,291 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 01, 2019 | Feb. 02, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares issued (in shares) | 801,000,000 | 830,000,000 |
Common stock, shares outstanding (in shares) | 801,000,000 | 830,000,000 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Total Lowe’s Companies, Inc. Shareholders’ Equity | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Noncontrolling Interest |
Balance at Jan. 29, 2016 | $ 7,654 | $ 7,654 | $ 455 | $ 0 | $ 7,593 | $ (394) | $ 0 |
Balance, shares at Jan. 29, 2016 | 910 | ||||||
Net earnings | 3,093 | 3,091 | 3,091 | 2 | |||
Other comprehensive income/(loss) | 154 | 154 | 154 | ||||
Tax effect of non-qualified stock options exercised and restricted stock vested | 57 | 57 | 57 | ||||
Cash dividends declared | (1,169) | (1,169) | (1,169) | ||||
Share-based payment expense | 104 | 104 | 104 | ||||
Repurchase of common stock | $ (3,577) | (3,577) | $ (24) | (279) | (3,274) | ||
Repurchase of common stock, shares | (47.7) | (48) | |||||
Issuance of common stock under share-based payment plans | $ 138 | 138 | $ 2 | 136 | |||
Issuance of common stock under share-based payment plans, shares | 4 | ||||||
Noncontrolling interest resulting from acquisition | 109 | 0 | 109 | ||||
Dividends paid to noncontrolling interest holders | (2) | 0 | (2) | ||||
Purchase of noncontrolling interest | (127) | (18) | (18) | (109) | |||
Balance at Feb. 03, 2017 | 6,434 | 6,434 | $ 433 | 0 | 6,241 | (240) | 0 |
Balance, shares at Feb. 03, 2017 | 866 | ||||||
Net earnings | 3,447 | 3,447 | 3,447 | ||||
Other comprehensive income/(loss) | 251 | 251 | 251 | ||||
Cash dividends declared | (1,324) | (1,324) | (1,324) | ||||
Share-based payment expense | 99 | 99 | 99 | ||||
Repurchase of common stock | $ (3,174) | (3,174) | $ (20) | (215) | (2,939) | ||
Repurchase of common stock, shares | (39.6) | (40) | |||||
Issuance of common stock under share-based payment plans | $ 140 | 140 | $ 2 | 138 | |||
Issuance of common stock under share-based payment plans, shares | 4 | ||||||
Balance at Feb. 02, 2018 | $ 5,873 | 5,873 | $ 415 | 22 | 5,425 | 11 | 0 |
Balance, shares at Feb. 02, 2018 | 830 | 830 | |||||
Cumulative effect of accounting change | $ 33 | 33 | 33 | ||||
Net earnings | 2,314 | 2,314 | 2,314 | ||||
Other comprehensive income/(loss) | (220) | (220) | (220) | ||||
Cash dividends declared | (1,500) | (1,500) | (1,500) | ||||
Share-based payment expense | 74 | 74 | 74 | ||||
Repurchase of common stock | $ (3,045) | (3,045) | $ (16) | (209) | (2,820) | ||
Repurchase of common stock, shares | (31.7) | (32) | |||||
Issuance of common stock under share-based payment plans | $ 115 | 115 | $ 2 | 113 | |||
Issuance of common stock under share-based payment plans, shares | 3 | ||||||
Balance at Feb. 01, 2019 | $ 3,644 | $ 3,644 | $ 401 | $ 0 | $ 3,452 | $ (209) | $ 0 |
Balance, shares at Feb. 01, 2019 | 801 | 801 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Statement of Stockholders' Equity [Abstract] | |||
Cash dividends per share (in dollars per share) | $ 1.85 | $ 1.58 | $ 1.33 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Cash flows from operating activities: | |||
Net earnings | $ 2,314 | $ 3,447 | $ 3,093 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 1,607 | 1,540 | 1,590 |
Deferred income taxes | (151) | 53 | 28 |
Loss on property and other assets - net | 630 | 40 | 143 |
Impairment of goodwill | 952 | 0 | 0 |
Loss on extinguishment of debt | 0 | 464 | 0 |
(Gain) loss on cost method and equity method investments | 9 | (82) | 302 |
Share-based payment expense | 74 | 99 | 90 |
Changes in operating assets and liabilities: | |||
Merchandise inventory – net | (1,289) | (791) | (178) |
Other operating assets | (110) | 250 | (183) |
Accounts payable | 1,720 | (92) | 653 |
Other operating liabilities | 437 | 137 | 79 |
Net cash provided by operating activities | 6,193 | 5,065 | 5,617 |
Cash flows from investing activities: | |||
Purchases of investments | (1,373) | (981) | (1,192) |
Proceeds from sale/maturity of investments | 1,393 | 1,114 | 1,254 |
Capital expenditures | (1,174) | (1,123) | (1,167) |
Proceeds from sale of property and other long-term assets | 76 | 45 | 37 |
Purchases of derivative instruments | 0 | 0 | (103) |
Proceeds from settlement of derivative instruments | 0 | 0 | 179 |
Acquisition of business - net | 0 | (509) | (2,356) |
Other – net | (2) | 13 | (13) |
Net cash used in investing activities | (1,080) | (1,441) | (3,361) |
Cash flows from financing activities: | |||
Net change in short-term borrowings | (415) | 625 | 466 |
Net proceeds from issuance of long-term debt | 0 | 2,968 | 3,267 |
Repayment of long-term debt | (326) | (2,849) | (1,173) |
Proceeds from issuance of common stock under share-based payment plans | 114 | 139 | 139 |
Cash dividend payments | (1,455) | (1,288) | (1,121) |
Repurchase of common stock | (3,037) | (3,192) | (3,595) |
Other – net | (5) | (10) | (75) |
Net cash used in financing activities | (5,124) | (3,607) | (2,092) |
Effect of exchange rate changes on cash | (12) | 13 | (11) |
Net increase/(decrease) in cash and cash equivalents, including cash classified within current assets held for sale | (23) | 30 | 153 |
Less: Net increase in cash classified within current assets held for sale | (54) | 0 | 0 |
Net increase/(decrease) in cash and cash equivalents | (77) | 30 | 153 |
Cash and cash equivalents, beginning of year | 588 | 558 | 405 |
Cash and cash equivalents, end of year | $ 511 | $ 588 | $ 558 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Feb. 01, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 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 2,002 stores in the United States and Canada at February 1, 2019 . In addition, as of February 1, 2019 , Lowe’s operated 13 stores in Mexico; however, on November 20, 2018, the Company announced its plans to exit its retail operations in Mexico. 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 years 2018 and 2017 each contained 52 weeks and fiscal 2016 contained 53 weeks. All references herein for the years 2018 , 2017 , and 2016 represent the fiscal years ended February 1, 2019 , February 2, 2018 , and February 3, 2017 , respectively. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled operating subsidiaries. All intercompany accounts and transactions have been eliminated. During the first quarter of fiscal year 2018, the Company conformed the financial reporting calendar of a subsidiary, which did not have a significant effect on the consolidated financial statements. 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’ equity in accumulated other comprehensive income/loss. Gains and losses from foreign currency transactions are included in selling, general and administrative (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 money market funds, corporate debt securities, and agency securities, all of which are classified as available-for-sale. Available-for-sale securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income/loss. Gross unrealized gains and losses were not significant for any of the periods presented. The proceeds from sales of available-for-sale securities were $506 million , $523 million , and $505 million for 2018 , 2017 , and 2016 , respectively. Gross realized gains and losses on the sale of available-for-sale securities were not significant for any of the periods presented. 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. Investments classified as long-term at February 1, 2019 , will mature in one to 16 years, based on stated maturity dates. The Company classifies as investments restricted balances primarily pledged as collateral for the Company’s extended protection plan program. Restricted balances included in short-term investments were $218 million at February 1, 2019 , and $86 million at February 2, 2018 . Restricted balances included in long-term investments were $256 million at February 1, 2019 , and $381 million at February 2, 2018 . Merchandise Inventory - The majority of the Company’s inventory is stated at the lower of cost and net realizable value using the first-in, first-out method of inventory accounting. Inventory for certain subsidiaries representing approximately 7% and 10% of the consolidated inventory balances as of February 1, 2019 and February 2, 2018 , respectively, are stated at lower of cost and net realizable value using other inventory methods, including the weighted average cost method and the retail inventory method. 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 anticipated loss associated with selling inventories below cost. 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 obsolescence in the near term, and management has the ability to adjust purchasing practices 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 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 receives funds from vendors in the normal course of business, principally as a result of purchase volumes, sales, early payments, or 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 complexity and 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 occasionally utilizes derivative financial instruments to manage certain business risks. However, the amounts were not material to the Company’s consolidated financial statements in any of the years presented. Sale of Business Accounts Receivable - The Company has an agreement with Synchrony Bank (Synchrony) under which Synchrony purchases at face value commercial business accounts receivable originated by the Company and services these accounts. The Company primarily accounts for these transfers as sales of the accounts receivable. When the Company transfers its commercial business accounts receivable, it retains 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 is 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 is 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. Total commercial business accounts receivable sold to Synchrony were $3.1 billion in 2018 , $3.1 billion in 2017 , and $2.8 billion in 2016 . The Company recognized losses of $41 million in 2018 , $39 million in 2017 , and $32 million in 2016 on these receivable sales as SG&A expense, which primarily relates to the fair value of obligations related to servicing costs that are remitted to Synchrony monthly. At February 1, 2019 and February 2, 2018 , the fair value of the retained interests was determined based on the present value of expected future cash flows and was insignificant. Other Credit Programs - Sales generated through the Company’s proprietary credit cards are not reflected in receivables. Under an agreement with 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. Portfolio income associated with the propriety credit program is included in sales in the consolidated statements of earnings as of the adoption of Accounting Standards Update 2014-09 (ASU 2014-09) in fiscal 2018. ASU 2014-09 was adopted using the modified retrospective approach; therefore, fiscal 2017 and fiscal 2016 present portfolio income associated with the proprietary credit program within SG&A expense. 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 capital lease and leasehold improvements. Equipment primarily includes store racking and displays, computer hardware and software, forklifts, vehicles, and other store equipment . Depreciation is provided over the estimated useful lives of the depreciable assets. Assets are depreciated using the straight-line method. Leasehold improvements and assets under capital lease are depreciated over the shorter of their estimated useful lives or the term of the related lease, which may include one or more option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. During the term of a lease, if leasehold improvements are placed in service significantly after the inception of the lease, the Company depreciates these leasehold improvements over the shorter of the useful life of the leasehold assets or a term that includes lease renewal periods deemed to be reasonably assured at the time the leasehold improvements are placed into service. The amortization of these assets is included in depreciation and amortization expense in the consolidated financial statements. Long-Lived Asset Impairment/Exit Activities - 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. 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. Excess properties that are expected to be sold within the next 12 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 re-evaluated. Impairment losses are included in SG&A expense in the consolidated statements of earnings. Fair value measurements associated with long-lived asset impairments are further described in Note 6 to the consolidated financial statements. When locations under operating leases are closed, a liability is recognized for the fair value of future contractual obligations, including future minimum lease payments, property taxes, utilities, common area maintenance, and other ongoing expenses, net of estimated sublease income and other recoverable items. Subsequent changes to the liabilities, including a change resulting from a revision to either the timing or the amount of estimated cash flows, are recognized in the period of change. Expenses associated with exit activities are included in SG&A expense in the consolidated statement of earnings. Goodwill - Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less liabilities assumed, in a business combination. The Company reviews goodwill for impairment at the reporting unit level, which is one level below the operating segment level. Goodwill is not amortized but is evaluated for impairment at least annually on the first day of the fourth quarter or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. The evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If, after assessing qualitative factors, we determine it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the quantitative goodwill impairment test is performed. The quantitative goodwill impairment test used to identify potential impairment compares the fair value of a reporting unit with its carrying amount, including goodwill. Fair value represents the price a market participant would be willing to pay in a potential sale of the reporting unit and is based on a combination of an income approach, based on discounted future cash flows, and a market approach, based on market multiples applied to free cash flow. If the fair value exceeds carrying value, then no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, in accordance with Accounting Standards Update 2017-04 which was early adopted by the Company in fiscal 2018, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Any impairment identified is included within SG&A expense in the consolidated statements of earnings. The income tax effect from any tax deductible goodwill on the carrying amount of the reporting unit, if applicable, is considered in determining the goodwill impairment loss. A reporting unit is an operating segment or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. During fiscal 2018, goodwill was allocated to the following reporting units: U.S. Home Improvement, Canada-Retail, and Canada-Distribution. The changes in the carrying amount of goodwill for 2018 , 2017 , and 2016 were as follows: (In millions) 2018 2017 2016 Goodwill, balance at beginning of year $ 1,307 $ 1,082 $ 154 Acquisitions 1 — 160 1,015 Impairment (952 ) — (46 ) Other adjustments 2 (52 ) 65 (41 ) Goodwill, balance at end of year $ 303 $ 1,307 $ 1,082 1 Goodwill recorded for 2017 acquisitions relates to Maintenance Supply Headquarters. Goodwill recorded for 2016 acquisitions primarily relates to RONA. See Note 4 for additional information regarding these acquisitions. 2 Other adjustments primarily consist of changes in the goodwill balance as a result of foreign currency translation. The Company’s annual goodwill impairment analysis performed during the fourth quarter of fiscal 2018 included a quantitative analysis of the Canada-Retail and Canada-Distribution reporting units. The Company classified these fair value measurements as Level 3. See Note 6 for additional information on the Company’s fair value measurements. The Company performed a discounted cash flow analysis and market multiple analysis for the Canada-Retail and Canada-Distribution reporting units. These discounted cash flow models included management assumptions for expected sales growth, margin expansion, operational leverage, capital expenditures, and overall operational forecasts. The market multiple analysis included historical and projected performance, market capitalization, volatility, and multiples for industry peers. These analyses led to the conclusion that the fair value of these reporting units was less than their carrying values by an amount that exceeded the carrying value of goodwill, primarily driven by a softening outlook for the Canadian housing market. Accordingly, the full carrying value of $952 million relating to the Canadian reporting units’ goodwill was impaired during the fourth quarter of 2018. During the third quarter of fiscal 2016, the Company determined potential indicators of impairment within the Orchard reporting unit existed, and quantitatively evaluated the Orchard reporting unit for impairment. The Company classified this fair value measurement as Level 3. See Note 6 for additional information on the Company’s fair value measurements. The Company performed a discounted cash flow analysis for the Orchard reporting unit. The discounted cash flow model included management assumptions for expected sales growth, expansion plans, capital expenditures, and overall operational forecasts. The analysis led to the conclusion that the goodwill allocated to the Orchard reporting unit had no implied value. Accordingly, the full carrying value of $46 million relating to Orchard goodwill was impaired during the third quarter of 2016. Gross carrying amounts and cumulative goodwill impairment losses are as follows: February 1, 2019 February 2, 2018 (In millions) Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment Goodwill $ 1,302 $ (999 ) $ 1,354 $ (47 ) Equity Method Investments - The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other assets (non-current) in the accompanying consolidated balance sheets. The balance is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance is decreased for its equity in losses of the investees, for distributions received that are not in excess of the carrying amount of the investments, and for any other than temporary impairment losses recognized. Equity method investments were not significant as of February 1, 2019 and February 2, 2018 . The Company’s equity in earnings and losses of the investees are included in SG&A expense, and were not significant for any of the periods presented. Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that a decline in value has occurred that is other than temporary. Evidence considered in this evaluation includes, but would not necessarily be limited to, the financial condition and near-term prospects of the investee, recent operating trends and forecasted performance of the investee, market conditions in the geographic area or industry in which the investee operates and the Company’s strategic plans for holding the investment in relation to the period of time expected for an anticipated recovery of its carrying value. Investments that are determined to have a decline in value deemed to be other than temporary are written down to estimated fair value. The Company’s other than temporary impairment losses are included in SG&A expense, and were not significant for 2018 and 2017 . See Note 5 for additional information on the other than temporary impairment loss the Company recognized in 2016 , related to its investment in the Australian joint venture. Leases - For lease agreements that provide for escalating rent payments or free-rent occupancy periods, the Company recognizes rent expense on a straight-line basis over the non-cancellable lease term and option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. The lease term commences on the date that the Company takes possession of or controls the physical use of the property. Deferred rent is included in other liabilities (non-current) on the consolidated balance sheets. When the Company renegotiates and amends a lease to extend the non-cancellable lease term prior to the date at which it would have been required to exercise or decline a term extension option, the amendment is treated as a new lease. The new lease begins on the date the lease amendment is entered into and ends on the last date of the non-cancellable lease term, as adjusted to include any option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease amendment, to be reasonably assured. The new lease is classified as operating or capital under the authoritative guidance through use of assumptions regarding residual value, economic life, incremental borrowing rate, and fair value of the leased asset(s) as of the date of the amendment. Accounts Payable - The Company has an agreement with a third party to provide an accounts payable tracking system 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 this arrangement is to capture overall supply chain 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 this arrangement. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this arrangement for those payment obligations that have been financed by suppliers. The Company’s outstanding payment obligation placed on the accounts payable tracking system were $2.1 billion as of February 1, 2019 and $1.6 billion as of February 2, 2018 , and participating suppliers had financed $1.5 billion and $1.1 billion , respectively, of those payment obligations to participating financial institutions. Other Current Liabilities - Other current liabilities on the consolidated balance sheets consist of: (In millions) February 1, 2019 February 2, 2018 Accrued dividends $ 385 $ 340 Self-insurance liabilities 378 347 Sales return reserve 194 71 Accrued interest 184 184 Sales tax liabilities 179 144 Accrued property taxes 108 109 Other 997 755 Total $ 2,425 $ 1,950 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 insurance coverage to limit the exposure arising from these claims. The Company is also self-insured for certain losses relating to extended protection plan and 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. The total self-insurance liability, including the current and non-current portions, was $953 million and $890 million at February 1, 2019 , and February 2, 2018 , respectively. 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 $246 million and $238 million at February 1, 2019 , and February 2, 2018 , respectively. 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 financial statements. The Company records any applicable penalties related to tax issues within the income tax provision. Shareholders’ Equity - 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 retired and 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 retained earnings. 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 payroll and benefit costs and occupancy costs; 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 Costs associated with inventory shrinkage and obsolescence; n Costs of services performed under the extended protection plan. n Payroll and benefit costs for retail and corporate employees; n Occupancy costs of retail and corporate facilities; n Advertising; n Third-party, in-store service costs; n Tender costs, including bank charges, costs associated with credit card interchange fees and amounts associated with accepting the Company’s proprietary credit cards; 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 expense as incurred. Advertising expenses were $963 million , $968 million , and $893 million in 2018 , 2017 , and 2016 , respectively. Store Opening Costs - Costs of opening new or relocated retail stores, which include payroll and supply costs incurred prior to store opening and grand opening advertising costs, are charged to expense as incurred. Comprehensive Income - The Company reports comprehensive income in its consolidated statements of comprehensive income and consolidated statements of shareholders’ equity. Comprehensive income represents changes in shareholders’ equity from non-owner sources and is comprised of net earnings adjusted primarily for foreign currency translation adjustments. Net foreign currency translation losses, net of tax, classified in accumulated other comprehensive loss were $209 million and $240 million at February 1, 2019 and February 3, 2017 , respectively. Net foreign currency translation gains, net of tax, classified in accumulated other comprehensive income were $11 million at February 2, 2018 . Segment Information - The Company’s home improvement retail operations represent a single reportable segment. Key operating decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s home improvement retail and hardware stores sell similar products and services, use similar processes to sell those products and services, and sell their products and services to similar classes of customers. In addition, the Company’s operations exhibit similar long-term economic characteristics. The amounts of long-lived assets and net sales outside of the U.S. were approximately 9.1% and 7.6% , respectively, at February 1, 2019 . The amounts of long-lived assets and net sales outside of the U.S. were approximately 9.8% and 7.8% , respectively, at February 2, 2018 . The amounts of long-lived assets and net sales outside of the U.S. were approximately 8.7% and 5.7% , respectively, at February 3, 2017 . Reclassifications - Certain prior period amounts have been reclassified to conform to current classifications. Accounting Pronouncements Recently Adopted - Effective November 3, 2018, the Company early adopted Accounting Standards Update 2017-04 (ASU), Intangibles-Goodwill and Other (Topic 350) . The ASU eliminates Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation to the identified assets and liabilities of the reporting unit to measure goodwill impairment. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU |
Change in Accounting Principle
Change in Accounting Principle | 12 Months Ended |
Feb. 01, 2019 | |
Change in Accounting Principle | |
Change in Accounting Principle | Change in Accounting Principle - During the fourth quarter of fiscal 2018 , the Company changed its method of accounting for shipping and handling costs from the Company’s stores, distribution centers, and other locations to customers. Under the new accounting principle, shipping and handling costs related to the delivery of products from the Company to customers are included in costs of sales, whereas previously, they were included in SG&A expense as well as depreciation and amortization. In connection with the change in presentation, the Company also changed its definition of shipping and handling costs to include all direct and indirect costs associated with delivering product to a customer, including expenses associated with the central delivery terminals and depreciation and amortization of delivery assets. Under the previous definition of shipping and handling costs, the Company only included third-party delivery costs, salaries, and vehicle operations expenses relating to the delivery of product from stores and distribution centers to customers. The impact of this change in definition was not material. The Company believes including these expenses in cost of sales is preferable, as it better aligns these costs with the related revenue in the gross profit calculation and is consistent with the practices of other retailers. This change in accounting principle has been applied retrospectively, and the consolidated statements of earnings reflect the effect of this accounting principle change in all years presented. This reclassification had no impact on operating income, net earnings or diluted earnings per share. The consolidated balance sheets, the consolidated statements of comprehensive income, consolidated statements of shareholders’ equity, and the consolidated statements of cash flows are not impacted by this accounting principle change. The consolidated statements of earnings for fiscal 2018, 2017 , and 2016 have been adjusted to reflect this change in accounting principle. The impact of the adjustment for fiscal 2018 was an increase of $1.2 billion to cost of sales and a corresponding decrease to SG&A expense of $1.1 billion and depreciation and amortization expense of $39 million . The impact of this adjustment for fiscal 2017 was an increase of $975 million to cost of sales and a corresponding decrease to SG&A expense of $932 million and depreciation and amortization expense of $43 million . The impact of the adjustment to fiscal 2016 was an increase of $790 million to cost of sales and a corresponding decrease to SG&A expense of $754 million and depreciation and amortization expense of $36 million . |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Feb. 01, 2019 | |
Revenue Recognition | |
Revenue Recognition | Revenue Recognition - 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) Year Ended February 1, 2019 February 2, 2018 February 3, 2017 Products $ 67,197 $ 65,421 $ 62,053 Services 2,539 2,469 2,505 Other 1,573 729 459 Net sales $ 71,309 $ 68,619 $ 65,017 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, which is 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. Under ASU 2014-09, the merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets as of reporting periods after February 2, 2018 . Reporting periods prior to the adoption of ASU 2014-09 reflect merchandise return reserves on a net basis. As of February 1, 2019 , anticipated sales returns of $194 million are reflected in other current liabilities, and the associated right of return assets of $127 million are reflected in other current assets. As of February 2, 2018 , the merchandise return reserve, net of the associated asset, was $71 million reflected in other current liabilities. 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 less than one week from initiation. Deferred revenue is presented for merchandise that has not yet transferred control to the customer and for services that have not yet been provided, but for which tender has been accepted. 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. Deferred revenues associated with amounts received for which customers have not taken possession of the merchandise or for which installation has not yet been completed were $790 million at February 1, 2019 and $831 million at February 2, 2018 . The majority of revenue for goods and services is recognized in the quarter following revenue deferral. Stored-value cards 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 liability associated with outstanding stored-value cards was $509 million and $547 million at February 1, 2019 , and February 2, 2018 , respectively, and these amounts are included in deferred revenue on the consolidated balance sheets. Upon adoption of ASU 2014-09, the Company recognizes income from unredeemed stored-value cards in proportion to the pattern of rights exercised by the customer. Amounts recognized as breakage were insignificant for the years ended February 1, 2019 , February 2, 2018 and February 3, 2017 . Extended protection plans The Company also defers revenues for its separately-priced extended protection plan contracts, which is a Lowe’s-branded program for which the Company is ultimately self-insured. The Company recognizes revenue from extended protection plan sales on a straight-line basis over the respective contract term. Extended 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. Deferred revenue from extended protection plans recognized into sales were $390 million for the fiscal year ended February 1, 2019 , $368 million for the fiscal year ended February 2, 2018 , and $353 million for the fiscal year ended February 3, 2017 , respectively. Incremental direct acquisition costs associated with the sale of extended protection plans are also deferred and recognized as expense on a straight-line basis over the respective contract term and were insignificant at February 1, 2019 , February 2, 2018 and February 3, 2017 , respectively. The Company’s extended protection plan deferred costs are included in other assets (noncurrent) on the consolidated balance sheets. All other costs, such as costs of services performed under the contract, general and administrative expenses, and advertising expenses are expensed as incurred. The liability for extended protection plan claims incurred is included in other current liabilities on the consolidated balance sheets and was not material in any of the periods presented. Expenses for claims are recognized when incurred and totaled $183 million for the fiscal year ended February 1, 2019 , $161 million for the fiscal year ended February 2, 2018 , $141 million for the fiscal year ended February 3, 2017 , respectively. Disaggregation of Revenues The following table presents the Company’s net sales disaggregated by merchandise division: Year Ended February 1, 2019 February 2, 2018 February 3, 2017 (In millions) Total Sales % Total Sales % Total Sales % Building & Maintenance ¹ $ 28,582 40 $ 27,689 41 $ 25,868 40 Home Décor ² 27,987 39 27,422 39 26,269 40 Seasonal ³ 12,786 18 12,384 19 12,090 19 Other 1,955 3 1,124 1 790 1 Total $ 71,309 100 $ 68,619 100 $ 65,017 100 1 Building & Maintenance includes the following product categories: Lumber & Building Materials, Millwork, Rough Plumbing & Electrical, and Tools & Hardware. 2 Home Décor includes the following product categories: Appliances, Fashion Fixtures, Flooring, Kitchens, and Paint. 3 Seasonal includes the following product categories: Lawn & Garden and Seasonal & Outdoor Living. The following table presents the Company’s net sales disaggregated by geographical area: (In millions) Year Ended February 1, 2019 February 2, 2018 February 3, 2017 United States $ 65,872 $ 63,263 $ 61,333 International 5,437 5,356 3,684 Net Sales $ 71,309 $ 68,619 $ 65,017 Practical Expedients Sales commissions and other selling costs are considered immaterial and are expensed as incurred because the amortization period of the assets would be one year or less. These costs are reflected within SG&A expenses. |
Acquisitions
Acquisitions | 12 Months Ended |
Feb. 01, 2019 | |
Acquisitions | |
Acquisitions | Acquisitions Maintenance Supply Headquarters On June 23, 2017, the Company completed its acquisition of Maintenance Supply Headquarters, a leading distributor of maintenance, repair and operations (MRO) products serving the multifamily housing industry. The acquisition enables the Company to deepen and broaden its relationship with Pro customers and better serve their needs. The aggregate cash purchase price of this acquisition was $513 million and is included in the investing section of the consolidated statements of cash flows, net of the cash acquired. Acquisition-related costs were expensed as incurred and were not significant. The following table summarizes the aggregate purchase price allocation: (In millions) June 23, 2017 Allocation: Cash acquired $ 4 Merchandise inventory 68 Other current assets 36 Property 12 Goodwill 160 Other assets 260 Accounts payable (18 ) Other current liabilities (9 ) Net assets acquired $ 513 Intangible assets acquired totaled $259 million , and include a trademark of $34 million with a useful life of 15 years and a customer list of $225 million with a useful life of 20 years , each of which are included in other assets in the accompanying consolidated balance sheets. The goodwill of $160 million is primarily attributable to the synergies associated with the acquisition and is deductible for tax purposes. Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements. RONA On May 20, 2016, the Company acquired all of the issued and outstanding common shares of RONA for C$24 per share in cash. In addition, as part of the transaction, borrowings under RONA’s revolving credit facility were settled in full at the closing of the acquisition, and the facility was eliminated. Total cash consideration to acquire the equity and settle the debt was C$3.1 billion ( $2.4 billion ) and is included in the investing section of the consolidated statements of cash flows. RONA is one of Canada’s largest retailers and distributors of hardware, building materials, home renovation, and gardening products. The acquisition enables the Company to accelerate its growth strategy by significantly expanding its presence in the Canadian home improvement market. Acquisition-related costs were expensed as incurred and were not significant. The following represents the aggregate purchase price allocation which includes purchase accounting adjustments made during the measurement period: (In millions) May 20, 2016 Purchase price: Cash paid to common shareholders $ 1,999 Cash paid to debt holders 368 Total cash paid $ 2,367 Allocation: Cash acquired $ 83 Accounts receivable 260 Merchandise inventory 814 Property 897 Goodwill 971 Other assets 437 Other current liabilities (619 ) Long-term liabilities (367 ) Noncontrolling interest (109 ) Net assets acquired $ 2,367 The intangible assets acquired totaled $310 million , and include trademarks of $204 million with a weighted average useful life of 15 years and dealer relationships of $106 million with a weighted average useful life of 20 years , which are included in other assets in the accompanying consolidated balance sheets. The goodwill of $971 million is primarily attributable to the synergies associated with the acquisition. Goodwill of approximately $107 million is expected to be deductible for tax purposes. The transaction included the assumption by Lowe’s of unsecured debentures held by RONA of approximately C$118 million ( $91 million ) as of the acquisition date. The debentures matured and were settled in October 2016. As of the acquisition date, 6.9 million preferred shares of RONA remained outstanding. The total fair value of the shares and Lowe’s corresponding noncontrolling interest was $109 million , which was determined based on the closing market price of RONA’s preferred shares on the acquisition date. During the fourth fiscal quarter of 2016, the Company acquired all of the remaining noncontrolling interest in RONA by paying RONA’s preferred shareholders approximately $127 million , which represented an $18 million premium in excess of the carrying amount of the noncontrolling interest. See Note 15 to the consolidated financial statements for information regarding the impact of this transaction to the Company’s earnings per share calculation. Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements. In addition, net earnings attributable to the noncontrolling interest was not significant for any of the reporting periods presented. |
Investment in Australian Joint
Investment in Australian Joint Venture | 12 Months Ended |
Feb. 01, 2019 | |
Investment in Australian Joint Venture | |
Investment in Australian Joint Venture | Investment in Australian Joint Venture In the fourth quarter of fiscal year 2015, the Company announced its decision to exit the Australian joint venture investment with Woolworths Limited (Woolworths) and recorded a $530 million impairment of its equity method investment due to a determination that there was a decrease in value that was other than temporary. The Company owned a one-third share in the joint venture, Hydrox Holdings Pty Ltd. (Hydrox), which operated Masters Home Improvement stores and Home Timber and Hardware Group’s retail stores and wholesale distribution in Australia. As a result of this decision to exit, Woolworths was required to purchase the Company’s one-third share at its fair value as of January 18, 2016. The process for the two parties agreeing on fair value is prescribed in the Joint Venture Agreement. The $530 million non-cash impairment charge recorded in fiscal 2015 was based on the Company’s estimate of the value of its portion of the overall joint venture fair value as of January 18, 2016. During the third quarter of fiscal year 2016, Woolworths claimed a unilateral termination of the joint venture agreement, and executed other agreements to initiate the wind down of Hydrox without the Company’s approval as required under the joint venture agreement. Due to this, Lowe’s concluded that under applicable accounting standards, the investment should be accounted for as a cost method investment going forward. As a result of this determination, accumulated foreign currency translation adjustments of $208 million were reclassified from accumulated other comprehensive loss into the carrying value of the cost method investment. In addition, the unilateral actions of Woolworths to begin the liquidation of Hydrox, represented a triggering event requiring the Company to evaluate the cost method investment for impairment. Management determined that the requirements for determining impairment were met, and leveraged wind down cash flow projections in determining the estimated fair value of the entity as of October 28, 2016. The value was determined using an income approach based upon the expected future cash flows generated from the settlement of assets and liabilities inclusive of inventory, property, payables, lease liabilities and employee entitlements. As a result, the Company recorded a $290 million non-cash impairment charge during the third quarter of fiscal 2016 to reflect its estimated portion of the overall joint venture fair value in wind down. The Company classified this fair value measurement as Level 3. See Note 6 for additional information on the Company’s fair value measurements. Following the impairment recorded in the third quarter of fiscal 2016, the Company considered the amount due under the joint venture agreement, which was based on the fair value as of January 18, 2016 on a going concern basis, to exceed the recorded amount of the investment, which was based on an estimated current fair value in wind down. This claim for additional value under the joint venture agreement above and beyond any amounts expected to be received through the wind down process, represented a contingent asset whereby the Company would recognize any amounts as they were realized. During the second quarter of fiscal 2017, the Company completed the sale of our interest in the Australian joint venture with Woolworths and received proceeds of $199 million , which is included in cash flows from investing activities in the accompanying consolidated statements of cash flows. The proceeds from the sale exceeded the carrying value of the investment and resulted in a gain of $96 million . The carrying value prior to the sale reflected the non-cash impairment charges taken in fiscal years 2015 and 2016. The gain is included in SG&A expense in the accompanying consolidated statements of earnings. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Feb. 01, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 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 Company’s available-for-sale securities represented the only significant assets measured at fair value on a recurring basis for the fiscal years ended February 1, 2019 and February 2, 2018 . The following table presents the Company’s financial assets measured at fair value on a recurring basis. The fair values of these instruments approximated amortized costs. Fair Value Measurements at (In millions) Measurement Level February 1, 2019 February 2, 2018 Available-for-sale securities: Money market funds Level 1 $ 207 $ 86 Agency securities Level 2 10 — Corporate debt securities Level 2 1 — Certificates of deposit Level 1 — 16 Total short-term investments $ 218 $ 102 Available-for-sale securities: Corporate debt securities Level 2 $ 191 $ — Agency securities Level 2 $ 65 $ — Municipal floating rate obligations Level 2 $ — $ 407 Certificates of deposit Level 1 — 1 Total long-term investments $ 256 $ 408 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, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values 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. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis For the fiscal year ended February 1, 2019 , the Company’s only significant measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition were goodwill (see Note 1 to the consolidated financial statements for additional information regarding this fair value measurement) and certain long-lived assets. For the fiscal year ended February 2, 2018 , the Company had no significant measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. Long-lived assets The Company reviews the carrying amount of a long-lived asset (group) whenever certain events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets are grouped for review at the lowest level of identifiable cash flows. With input from executive management and retail store operations, the Company’s accounting and finance personnel that organizationally report to the chief financial officer assess the performance of retail stores and other long-lived assets (groups) quarterly against historical patterns, projections of future profitability and whether it is more likely than not the assets (groups) will be disposed of significantly prior to the end of their estimated useful life for evidence of possible impairment. An impairment loss is recognized when the carrying amount of the asset or group is not recoverable and exceeds its fair value. The Company estimated the fair values of assets subject to long-lived asset impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. The Company classified these fair value measurements as Level 3. In the determination of impairment for operating locations, the Company determined the fair values of individual operating locations using an income approach, which required discounting projected future cash flows. When determining the stream of projected future cash flows associated with an individual operating location, management made assumptions, including highest and best use, incorporating local market conditions and inputs from retail store operations where necessary, and about key variables including the following unobservable inputs: sales growth rates, gross margin, controllable and uncontrollable expenses, and asset residual values. In order to calculate the present value of those future cash flows, the Company discounted cash flow estimates at a rate commensurate with the risk that selected market participants would assign to the cash flows. In general, the selected market participants represented a group of other retailers with a location footprint similar in size to the Company’s. Any impairment identified is included in SG&A expense in the accompanying consolidated statements of earnings. As part of a strategic reassessment of Orchard Supply Hardware (Orchard), during the three months ended August 3, 2018, it was determined to be more likely than not the assets of Orchard would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives, and therefore, these assets experienced a triggering event and were evaluated for recoverability. Operating locations evaluated for recoverability included all Orchard stores, as well as a distribution facility that services the Orchard stores and a corporate facility. Based on this evaluation of Orchard, certain long-lived assets, including tangible and intangible assets, were written down to their fair value of $284 million resulting in impairment charges of $206 million . During the three months ended November 2, 2018, the company committed to closing 20 U.S. home improvement stores and 31 locations in Canada, including 27 stores, as well as exiting certain non-core activities within its U.S. home improvement business. As a result of these decisions, the related assets experienced a triggering event and were evaluated for recoverability. Based on this evaluation, certain long-lived assets were written down to their fair value of $81 million resulting in impairment charges of $99 million . In addition, during the three months ended November 2, 2018, it was determined to be more likely than not that the assets of the Mexico operations would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives, and therefore, these assets experienced a triggering event and were evaluated for recoverability. Locations evaluated for recoverability included all 13 stores in Mexico, as well as a corporate facility. Based on this evaluation of the Mexico operations, certain long-lived assets were written down to their fair value of $107 million resulting in impairment charges of $22 million . Assets held for sale During the three months ended February 1, 2019, the Company committed to a plan to exit its Mexico operations and began marketing the operations to potential acquirers. In addition, the Company determined that the asset group is ready for immediate sale, completion of sale is probable within the next year, and no significant changes to the plan to sale are expected. Accordingly, as of February 1, 2019, the Company determined that the held-for sale criteria were met and measured the assets, including currency translation adjustments, of the Mexico operations at fair value less costs to sell of $79 million , resulting in an additional impairment charge of $222 million . The fair value of the Mexico operations was determined using a probability weighted approach of discounted cash flow and market multiple analyses and included management assumptions regarding expected sales growth, margin expansion, operational leverage, capital expenditures, and overall operational forecasts. The Company classified this fair value measurement as Level 3. These non-cash impairment charges are included in SG&A expense in the accompanying consolidated statements of earnings. See Note 8 for additional information regarding the Company’s decisions to exit its Orchard operations and certain U.S. and Canada locations during the third quarter and its decision to exit Mexico operations in the fourth quarter, as part of the Company’s ongoing strategic reassessment of the business. The following table presents the Company’s assets measured at estimated fair value on a nonrecurring basis and the resulting impairment losses included in earnings, excluding costs to sell for excess properties held-for-sale. Because these assets subject to impairment were not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at February 1, 2019 . Fair Value Measurements - Nonrecurring Basis February 1, 2019 (In millions) Fair Value Measurements Impairment Losses Assets-held-for-use: Operating locations $ 473 $ (331 ) Assets-held-for-sale: Mexico operating locations $ 79 $ (222 ) Goodwill (Note 1) $ 2,851 $ (952 ) Total $ 3,403 $ (1,505 ) Fair Value of Financial Instruments The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, 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. 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 capitalized lease obligations, are as follows: February 1, 2019 February 2, 2018 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,721 $ 14,473 $ 14,961 $ 15,608 Mortgage notes (Level 2) 6 6 6 7 Long-term debt (excluding capitalized lease obligations) $ 14,727 $ 14,479 $ 14,967 $ 15,615 |
Property and Accumulated Deprec
Property and Accumulated Depreciation | 12 Months Ended |
Feb. 01, 2019 | |
Property and Accumulated Depreciation | |
Property and Accumulated Depreciation | Property and Accumulated Depreciation Property is summarized by major class in the following table: (In millions) Estimated February 1, 2019 February 2, 2018 Cost: Land N/A $ 7,196 $ 7,414 Buildings and building improvements 5-40 18,052 18,521 Equipment 2-15 10,090 10,475 Construction in progress N/A 525 530 Total cost 35,863 36,940 Accumulated depreciation (17,431 ) (17,219 ) Property, less accumulated depreciation $ 18,432 $ 19,721 Included in net property are assets under capital lease of $665 million , less accumulated depreciation of $244 million , at February 1, 2019 , and $724 million less accumulated depreciation of $273 million , at February 2, 2018 . The related amortization expense for assets under capital lease is included in depreciation expense. The Company recognized depreciation expense of $1.4 billion in 2018 and 2017 , and $1.5 billion in 2016 . |
Exit Activities
Exit Activities | 12 Months Ended |
Feb. 01, 2019 | |
Exit Activities | |
Exit Activities | Exit Activities During the second quarter of fiscal year 2018, the Company initiated a strategic reassessment of its business to drive increased focus on its core home improvement operations. As a result of this reassessment, the Company decided to exit certain activities and close certain locations as further described below. Orchard Supply Hardware (Orchard) On August 17, 2018, the Company approved plans to exit its Orchard operations by closing all 99 Orchard stores, which are located in California, Oregon and Florida, as well as the distribution facility that services the Orchard stores, and the Orchard corporate office. To facilitate an orderly wind-down, the Company partnered with Hilco Merchant Services to help manage the store closing sales process and provide a seamless experience for customers. All facilities were closed by the end of fiscal year 2018. During the second quarter ended August 3, 2018, the Company recorded $230 million of pre-tax charges associated with its Orchard operations. This included $206 million of impairment of certain long-lived assets, including tangible and intangible assets, due to the determination it was more likely than not the assets of Orchard would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives (see Note 6 to the consolidated financial statements) and $24 million related primarily to three store projects that were discontinued during the quarter. During the third quarter ended November 2, 2018, the Company recorded $123 million of pre-tax charges related to the exit of its Orchard operations, including accelerated depreciation and amortization of $103 million , severance costs of $11 million , and costs associated with lease obligations of $9 million During the fourth quarter ended February 1, 2019, the Company recorded $208 million of additional pre-tax charges related to lease obligation costs at the cease use date of the individual facilities. U.S. and Canada Location Closings On October 31, 2018, the Company committed to closing 20 U.S. home improvement stores and 31 locations in Canada, including 27 stores. The store closings were completed in the fourth quarter of fiscal 2018. In addition, the Company concurrently decided to no longer pursue a new store project that was in process. As a result of these decisions, during the third quarter ended November 2, 2018, the Company recorded $121 million of pre-tax charges, including $90 million of impairment of certain long-lived assets (see Note 6 to the consolidated financial statements), severance costs of $21 million , and discontinued project costs of $10 million . The Company recorded $150 million of additional pre-tax charges during the fourth quarter ended February 1, 2019, including lease obligation costs of $89 million , accelerated depreciation of $50 million , and severance costs of $11 million . Mexico Operations On November 9, 2018, subsequent to the end of the Company’s third quarter of fiscal 2018, management and the Board of Directors decided to pursue an exit of the Company’s Mexico operations. During the third quarter ended November 2, 2018, the Company recorded $22 million of pre-tax charges associated with long-lived asset impairment due to the determination it was more likely than not the assets of the Mexico operations would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives. During the fourth quarter ended February 1, 2019, the Company committed to a plan to exit its Mexico operations and classified these assets as held for sale. As a result, impairment charges of $222 million were recorded during the quarter to measure the Mexico operations at fair value less costs to sell. (See Note 6 for additional information regarding these fair value measurements). Other Non-Core Activities During the third quarter ended November 2, 2018, the Company decided to pursue an exit of certain non-core activities within its U.S. home improvement business. As a result of these decisions, during the third quarter ended November 2, 2018, the Company recorded $14 million of pre-tax charges, including long-lived asset impairments of $9 million (see Note 6 to the consolidated financial statements), and the write-down of inventory to net realizable value of $5 million . During the fourth quarter ended February 1, 2019, the Company recorded additional pre-tax charges of $32 million , including closing costs of $27 million , severance costs of $3 million , and write-down of inventory to net realizable value of $2 million . In addition, during the fourth quarter ended February 1, 2019, the Company decided to eliminate the Projects Specialists Interiors positions from its U.S. home improvement stores. As a result of the elimination of this position, the Company recorded $13 million of pre-tax charges related to severance costs. A summary of the significant components of charges associated with the exit activities discussed above, are as follows: Costs Incurred Three Months Ended Three Months Ended Three Months Ended Year Ended (In millions) August 3, 2018 November 2, 2018 February 1, 2019 February 1, 2019 Long-lived asset impairments $ 206 $ 121 $ 222 $ 549 Lease obligation costs for closed locations — 9 298 307 Accelerated depreciation and amortization — 103 50 153 Severance costs — 32 26 58 Discontinued project write-offs 24 10 — 34 Inventory adjustments to net realizable value — 5 2 7 Other closing costs — — 27 27 Total $ 230 $ 280 $ 625 $ 1,135 All estimated amounts are subject to change until finalized. Expenses associated with long-lived asset impairment, discontinued projects, severance, and lease obligations, are included in SG&A expense in the consolidated statement of earnings. Inventory adjustments to net realizable value are included in cost of sales in the consolidated statement of earnings. Severance costs of $33 million remain accrued as of February 1, 2019 related to the Company’s strategic reassessment of the business. The following table summarizes store closing lease obligations activity during the twelve months ended February 1, 2019: 2018 (In millions) Lease obligations Accrual for exit activities, balance at the beginning of period $ 60 Additions to the accrual - net 365 Cash payments (86 ) Adjustments 1 22 Accrual for exit activities, balance at the end of period $ 361 1 Adjustments represents changes in estimates around sublease assumptions. |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Feb. 01, 2019 | |
Short-Term Borrowings | |
Short-Term Borrowings | Short-Term Borrowings In September 2018, the Company entered into a $1.75 billion five year unsecured revolving second amended and restated credit agreement (the Second Amended and Restated Credit Agreement) with a syndicate of banks. The Second Amended and Restated Credit Agreement amends and restates the Company’s amended and restated credit agreement, dated November 23, 2016 (the Amended and Restated Credit Agreement), to among other things (i) extend the maturity date of the revolving credit facility to September 2023 and (ii) modify the revolving commitments of the existing lenders. The Company may request borrowings under the Second Amended and Restated Credit Agreement that are denominated in U.S. Dollar, Euro, Sterling, Canadian Dollar and other currencies approved by the administrative agent and the lenders. Borrowings under the Second Amended and Restated Credit Agreement will bear interest calculated according to a Base Rate or a Eurocurrency Rate, plus an applicable margin. In January 2019, the Company increased the aggregate availability under the Second Amended and Restated Credit Agreement by $230 million for a total of $1.98 billion available. Subject to obtaining commitments from the lenders and satisfying other conditions specified in the Second Amended and Restated Credit Agreement, the Company may increase the aggregate availability by an additional $270 million . The Second Amended and Restated Credit Agreement contains customary representations, warranties, and covenants for a transaction of this type. The Company was in compliance with those covenants at February 1, 2019 . In September 2018, the Company entered into a $250 million unsecured 364 -day credit agreement (the 364 -Day Credit Agreement) with a syndicate of banks. The Company may request borrowings under the 364 -Day Credit Agreement that are denominated in U.S. Dollar, Euro, Sterling, Canadian Dollar and other currencies approved by the administrative agent and the lenders. The Company must repay the aggregate principal amount of loans outstanding under the 364 -Day Credit Agreement on the termination date in effect at such time (currently September 9, 2019). The Company may elect to convert all of the loans outstanding under the 364 -Day Credit Agreement on the termination date into a term loan which the Company shall repay in full on the first anniversary date of the termination date. Borrowings under the 364 -Day Credit Agreement will bear interest calculated according to a Base Rate or a Eurocurrency Rate plus an applicable margin. The 364 -Day Credit Agreement contains customary representations, warranties and covenants for a transaction of this type. The Company was in compliance with those covenants at February 1, 2019 . The Second Amended and Restated Credit Agreement and the 364 -Day Credit Agreement both support our commercial paper program. The amount available to be drawn under the Second Amended and Restated Credit Agreement and the 364 -Day Credit Agreement is reduced by the amount of borrowings under our commercial paper program. Outstanding borrowings under the Company’s commercial paper program were $722 million , with a weighted average interest rate of 2.81% , as of February 1, 2019 , and $1.1 billion , with a weighted average interest rate of 1.85% , as of February 2, 2018 . There were no outstanding borrowings under the Second Amended and Restated Credit Agreement or the 364-Day Credit Agreement as of February 1, 2019 . There were no outstanding borrowings under the Amended and Restated Credit Agreement as of February 2, 2018 . |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Feb. 01, 2019 | |
Long-Term Debt | |
Long-Term Debt | Long-Term Debt Debt Category Weighted-Average Interest Rate at February 1, 2019 February 1, 2019 February 2, 2018 Secured debt: Mortgage notes due through fiscal 2027 1 5.26 % $ 6 $ 6 Unsecured debt: Notes due through fiscal 2023 3.43 % 3,832 4,079 Notes due fiscal 2024-2028 3.30 % 4,393 4,389 Notes due fiscal 2029-2033 6.50 % 309 309 Notes due fiscal 2034-2038 5.96 % 897 897 Notes due fiscal 2039-2043 4.96 % 1,411 1,410 Notes due fiscal 2044-2048 4.01 % 3,879 3,877 Capitalized lease obligations due through fiscal 2038 774 891 Total long-term debt 15,501 15,858 Less current maturities (1,110 ) (294 ) Long-term debt, excluding current maturities $ 14,391 $ 15,564 1 Real properties with an aggregate book value of $16 million were pledged as collateral at February 1, 2019 , for secured debt. Debt maturities, exclusive of unamortized original issue discounts, unamortized debt issuance costs, and capitalized lease obligations, for the next five years and thereafter are as follows: 2019, $1.1 billion ; 2020, $500 million ; 2021, $1.0 billion ; 2022, $766 million ; 2023, $500 million ; thereafter, $11.0 billion . 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 covenants of these agreements at February 1, 2019 . Unsecured notes issued during 2016 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) April 2016 $ 250 April 2019 Floating Floating $ 1 April 2016 $ 350 April 2019 Fixed 1.150% $ 1 April 2016 $ 1,350 April 2026 Fixed 2.500% $ 12 April 2016 $ 1,350 April 2046 Fixed 3.700% $ 19 The floating rate notes issued in 2016 will bear interest at a floating rate, reset quarterly, equal to the three-month LIBOR -plus 0.240% ( 3.027% as of February 1, 2019). Interest on these floating rate notes is payable quarterly in arrears in April, July, October, and January of each year until maturity. Interest on the fixed rate notes issued in 2016 is payable semiannually in arrears in April and October of each year until maturity. Unsecured notes issued during 2017 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) May 2017 $ 1,500 May 2027 Fixed 3.100% $ 9 May 2017 $ 1,500 May 2047 Fixed 4.050% $ 23 Interest on the notes issued in 2017 is payable semiannually in arrears in May and November of each year until maturity. 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. The indentures governing the fixed rate notes issued in 2017 and 2016 contain a provision that allows the Company to redeem the notes at any time, in whole or in part, at specified redemption prices plus accrued interest to the date of redemption. We do not have the right to redeem the floating rate notes issued in 2016 prior to maturity. The indentures also contain 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 (as defined in the indentures) 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 and unpaid interest on such notes to the date of purchase, if any. The indentures governing the notes do not limit the aggregate principal amount of debt securities that the Company may issue and do 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. During 2017, the Company completed a cash tender offer to purchase and retire $1.6 billion combined aggregate principal amount of its outstanding notes and recognized a loss on extinguishment of debt of $464 million . |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Feb. 01, 2019 | |
Shareholders Equity | |
Shareholders' Equity | Shareholders’ Equity Authorized shares of preferred stock were 5.0 million ( $5 par value) at February 1, 2019 , and February 2, 2018 , 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 ( $.50 par value) at February 1, 2019 , and February 2, 2018 . 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 retired and returned to authorized and unissued status. On January 26, 2018, the Company’s Board of Directors authorized a $5.0 billion share repurchase under the program with no expiration, which was announced on the same day. On December 12, 2018, the Company’s Board of Directors authorized an additional $10.0 billion share repurchase under the program with no expiration, which was announced the same day. As of February 1, 2019 , the Company had $13.9 billion remaining under the program. During the year ended February 1, 2019 , the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 11.0 million shares of the Company’s common stock for $1.1 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 retained earnings. 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, follow (in millions): Agreement Execution Date ASR Settlement Date ASR Agreement Amount Initial Shares Delivered Additional Shares Delivered at Settlement Total Shares Delivered Q1 2016 Q2 2016 $ 500 6.2 0.6 6.8 Q2 2016 Q3 2016 500 5.3 1.0 6.3 Q3 2016 Q3 2016 250 2.8 0.6 3.4 Q4 2016 Q4 2016 190 2.4 0.2 2.6 Q1 2017 Q1 2017 500 5.3 0.8 6.1 Q2 2017 Q2 2017 500 5.2 1.2 6.4 Q3 2017 Q3 2017 250 2.9 0.3 3.2 Q2 2018 Q2 2018 550 4.8 0.8 5.6 Q3 2018 Q3 2018 310 2.5 0.3 2.8 Q4 2018 Q1 2019 270 2.6 0.3 2.9 During the year ended February 1, 2019 , the Company also repurchased shares of its common stock through the open market totaling 20.2 million shares for a cost of $ 1.9 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. Shares repurchased for 2018 , 2017 and 2016 were as follows: 2018 2017 2016 (In millions) Shares Cost 1 Shares Cost 1 Shares Cost 1 Share repurchase program 31.2 $ 2,999 39.1 $ 3,133 46.7 $ 3,500 Shares withheld from employees 0.5 46 0.5 41 1.0 77 Total share repurchases 31.7 $ 3,045 39.6 $ 3,174 47.7 $ 3,577 1 Reductions of $2.8 billion , $2.9 billion , and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2018 , 2017 , and 2016, respectively. |
Accounting for Share-Based Paym
Accounting for Share-Based Payments | 12 Months Ended |
Feb. 01, 2019 | |
Accounting for Share-Based Payments | |
Accounting for Share-Based Payments | Accounting for Share-Based Payments Overview of Share-Based Payment Plans The Company has a number of active and inactive equity incentive plans (the Incentive Plans) 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. All 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 199.0 million shares have been previously authorized for grant to key employees and non-employee directors under all of the Company’s Incentive Plans, but only 80.0 million of those shares were authorized for grants of share-based awards under the Company’s currently active Incentive Plans. In addition, a total of 70.0 million shares have been previously authorized for purchases by employees participating in the ESPP. At February 1, 2019 , there were 32.3 million shares remaining available for grants under the currently active Incentive Plans and 21.0 million s hares remaining available for purchases under the ESPP. The Company recognized share-based payment expense within SG&A expense in the consolidated statements of earnings of $74 million , $99 million , and $90 million in 2018 , 2017 and 2016 respectively. The total associated income tax benefit recognized was $15 million , $31 million and $29 million in 2018 , 2017 and 2016 , respectively. Total unrecognized share-based payment expense for all share-based payment plans was $113 million at February 1, 2019 , of which $59 million will be recognized in 2019, $42 million in 2020 and $12 million thereafter. This results in these amounts being recognized over a weighted-average period of 1.9 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 provided. 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 seven or 10 years, with one-third of each grant vesting each year for three years , 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 2018 , 2017 , and 2016 are as follows: 2018 2017 2016 Weighted-average assumptions used: Expected volatility 23.3 % 23.6 % 24.0 % Dividend yield 1.71 % 1.68 % 1.66 % Risk-free interest rate 2.71 % 2.14 % 1.42 % Expected term, in years 6.58 6.43 6.44 Weighted-average grant date fair value $ 21.12 $ 18.30 $ 15.00 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 $36 million , $77 million and $73 million in 2018 , 2017 and 2016 , respectively. Transactions related to stock options for the fiscal year ended February 1, 2019 are summarized as follows: Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at February 2, 2018 2,815 $ 60.84 Granted 1,021 90.75 Canceled, forfeited or expired (385 ) 79.63 Exercised (760 ) 55.95 Outstanding at February 1, 2019 2,691 $ 70.87 7.10 $ 72,613 Vested and expected to vest at February 1, 2019 1 2,610 $ 70.18 7.04 $ 72,067 Exercisable at February 1, 2019 1,719 $ 60.49 6.03 $ 62,943 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 at the end of a three -year period from the date of grant and 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 awards granted was $86.99 , $82.41 and $71.35 in 2018 , 2017 , and 2016 , respectively. The total fair value of restricted stock awards vesting was approximately $85 million , $71 million and $151 million in 2018 , 2017 and 2016 , respectively. Transactions related to restricted stock awards for the fiscal year ended February 1, 2019 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 2, 2018 1,896 $ 73.21 Granted 1,021 86.99 Vested (772 ) 70.93 Canceled or forfeited (355 ) 77.73 Nonvested at February 1, 2019 1,790 $ 81.16 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. For non-employee Directors, these awards vest immediately and are expensed on the grant date. During 2018 , 2017 and 2016 , each non-employee Director was awarded a number of deferred stock units determined by dividing the annual award amount by the fair market value of a share of the Company’s common stock on the award date and rounding up to the next 100 units. The annual award amount used to determine the number of deferred stock units granted to each Director was $175,000 for 2018 and 2017 , and $150,000 for 2016 . During 2018 , the Company appointed a new Chairman of the Board who received an additional grant of deferred stock units. The award amount used to determine the additional units granted was $140,000 . During 2018 , 24,300 deferred stock units were granted and immediately vested for non-employee Directors. The weighted-average grant-date fair value per share of deferred stock units granted was $95.83 , $80.22 and $80.35 in 2018 , 2017 and 2016 , respectively. The total fair value of deferred stock units vested was $2.3 million in 2018 , $1.8 million in 2017 , and $1.5 million in 2016 . At February 1, 2019 , there were 0.2 million deferred stock units outstanding, all of which were vested. 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 are classified as equity and contain performance and service conditions that must be satisfied for an employee to earn the right to benefit from the award. The performance condition is primarily based on the achievement of the Company’s target return on non-cash average assets (RONCAA). These awards 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 fiscal 2016, the Company began issuing performance share units that contain a market condition modifier, in addition to having a performance and service condition. The performance condition for these awards continues to be based primarily on the achievement of the Company’s RONCAA 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 used a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the possible outcomes pertaining to the TSR market condition. The weighted-average assumptions used in the Monte Carlo simulations for these awards granted in 2018 and 2017 are as follows: 2018 2017 Weighted-average assumptions used: Expected volatility 22.8 % 20.8 % Dividend yield 1.77 % 1.62 % Risk-free interest rate 2.36 % 1.46 % Expected term, in years 2.81 2.83 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 $82.22 , $91.50 and $77.58 in 2018 , 2017 and 2016 , respectively. The total fair value of performance share units vesting was approximately $13 million , $31 million , and $24 million in 2018 , 2017 , and 2016 , respectively. Transactions related to performance share units classified as equity awards for the fiscal year ended February 1, 2019 are summarized as follows: Units 1 Weighted-Average Grant-Date Fair Value Per Unit Nonvested at February 2, 2018 698 $ 81.31 Granted 320 82.22 Vested (144 ) 71.22 Canceled or forfeited (261 ) 82.09 Nonvested at February 1, 2019 613 $ 83.83 ¹ The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of February 1, 2019 , the maximum number of nonvested units that could vest under the provisions of the agreements was 1.2 million for the RONCAA awards. 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 at the end of a three -year period from the date of grant and 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 $80.32 , $75.44 and $67.26 in 2018 , 2017 and 2016 , respectively. The total fair value of restricted stock units vesting was approximately $7.1 million , $5.6 million , and $7.7 million in 2018 , 2017 and 2016 , respectively. Transactions related to restricted stock units for the fiscal year ended February 1, 2019 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 2, 2018 277 $ 69.21 Granted 182 80.32 Vested (63 ) 66.62 Canceled or forfeited (67 ) 73.65 Nonvested at February 1, 2019 329 $ 74.95 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. The Company issued 0.9 million shares of common stock in 2018, 1.1 million shares of common stock in 2017, and 1.3 million shares of common stock in 2016 and recognized $13 million of share based payment expense pursuant to the plan in 2018 and 2017, and $15 million of share-based payment expense pursuant to the plan in 2016. |
Employee Retirement Plans
Employee Retirement Plans | 12 Months Ended |
Feb. 01, 2019 | |
Employee Retirement Plans | |
Employee Retirement Plans | 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 six months after their original date of service. Eligible employees hired or rehired prior to November 1, 2012, were automatically enrolled in the 401(k) Plan at a contribution rate of 1% of their pre-tax annual compensation unless they elected otherwise. Eligible employees hired or rehired November 1, 2012, or later must make an active election to participate in the 401(k) Plan. 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 $164 million , $174 million and $180 million in 2018 , 2017 and 2016 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 01, 2019 | |
Income Taxes | |
Income Taxes | Income Taxes The following is a reconciliation of the federal statutory tax rate to the effective tax rate: 2018 2017 2016 Statutory federal income tax rate 1 21.0 % 33.7 % 35.0 % State income taxes, net of federal tax benefit 4.8 2.9 3.6 Valuation allowance - Australian joint venture — (0.6 ) 2.0 Goodwill impairment 5.5 — — Mexico impairment 1.5 — — Other, net (1.0 ) 1.2 (0.1 ) Effective tax rate 31.8 % 37.2 % 40.5 % 1 The Company utilized a blended rate in 2017 due to the Tax Cuts and Job Act enacted on December 22, 2017. The components of the income tax provision are as follows: (In millions) 2018 2017 2016 Current: Federal $ 963 $ 1,734 $ 1,824 State 274 252 275 Total current 1 1,237 1,986 2,099 Deferred: Federal (102 ) 60 6 State (55 ) (4 ) 3 Total deferred 1 (157 ) 56 9 Total income tax provision $ 1,080 $ 2,042 $ 2,108 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) February 1, 2019 February 2, 2018 Deferred tax assets: Self-insurance $ 252 $ 238 Share-based payment expense 31 36 Deferred rent 58 66 Mexico impairment 74 — Capital loss carryforwards 223 225 Net operating losses 239 213 Other, net 119 124 Total deferred tax assets 996 902 Valuation allowance (569 ) (475 ) Net deferred tax assets 427 427 Deferred tax liabilities: Property (76 ) (264 ) Other, net (57 ) (23 ) Total deferred tax liabilities (133 ) (287 ) Net deferred tax asset $ 294 $ 140 The Tax Cuts and Job Act (Tax Act) was enacted on December 22, 2017. Among numerous changes to existing laws, the Tax Act lowered the corporate federal income tax rate from 35% to 21% , as well as established a one-time deemed repatriation tax, effective on January 1, 2018. In accordance with ASC 740, the effects of changes in tax rates on deferred tax balances are required to be taken into consideration in the period in which the changes are enacted versus when they are effective. During the fourth quarter of 2017, the Company recorded $56 million of provisional tax expense for the revaluation of its U.S. net deferred tax assets and a $22 million provisional tax expense for the one-time transition tax. A blended statutory tax rate of 33.7% was utilized for 2017 in accordance with Section 15 of the Internal Revenue Code. This blended rate resulted in a tax benefit of $58 million for the year. For 2018, the Company’s effective tax rate differs from the 21% statutory rate primarily due to a goodwill impairment charge related to the Company’s operations in Canada, the majority of which is non-deductible for tax purposes. In addition, the rate was impacted by the decision to exit Mexico retail operations, which resulted in the anticipated recapture of previously deducted losses, as well as other current charges associated with impairments that are expected to be non-deductible for tax purposes. The Company completed its assessment of the Tax Act’s impact in January 2018, and in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin (SAB 118). The Company recorded an additional adjustment of $2 million in tax related to the one-time deemed repatriation transition tax. As of February 1, 2019 , the Company reported a deferred tax asset of $223 million , for the capital loss realized in 2017 for U.S. federal income tax purposes related to the exit from the Company’s joint venture investment in Australia. Since no present or future capital gains have been identified through which the asset can be realized, the Company has a full valuation allowance against the deferred tax asset. For U.S. federal tax purposes, this loss has a five-year carryforward period expiring at the end of fiscal 2022. In December 2016, the U.S. Treasury Department and the U.S. Internal Revenue Service issued final and temporary regulations under Internal Revenue Code Section 987 (the Regulations). The Regulations provide guidance on the taxation of foreign currency gains and losses arising from qualified business units that operate in a currency other than the currency of their owner. As a result of the enacted guidance, net deferred tax assets were increased by $26 million in 2018 and decreased by $11 million and $33 million in 2017 and 2016, respectively. The Company’s plan to exit Mexico prior to the effective date of the Regulations resulted in $18 million of the deferred tax increase in 2018. The Company operates as a branch in various foreign jurisdictions and cumulatively has incurred net operating losses of $800 million and $720 million as of February 1, 2019 , and February 2, 2018 , respectively. These net operating losses are subject to expiration in 2019 through 2038 . Deferred tax assets have been established for these foreign net operating losses in the accompanying consolidated balance sheets. Given the uncertainty regarding the realization of the foreign net deferred tax assets, the Company recorded cumulative valuation allowances of $331 million and $234 million as of February 1, 2019 , and February 2, 2018 , respectively. A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows: (In millions) 2018 2017 2016 Unrecognized tax benefits, beginning of year $ — $ 6 $ 3 Additions for tax positions of prior years 10 — 3 Reductions for tax positions of prior years — (2 ) — Settlements — (1 ) — Reductions due to a lapse in applicable statute of limitations — (3 ) — Unrecognized tax benefits, end of year $ 10 $ — $ 6 The amounts of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate were $8 million as of February 1, 2019 , and $5 million as of February 3, 2017 . The Company recognized $3 million of interest expense, $3 million of interest income, and $2 million of interest expense related to uncertain tax positions during 2018 , 2017 , and 2016 , respectively. The Company had $3 million of accrued interest related to uncertain tax positions as of February 1, 2019 . The Company had no accrued interest related to uncertain tax positions as of February 2, 2018 . Penalties recognized related to uncertain tax positions were insignificant for 2018 , 2017 , and 2016 . Accrued penalties were also insignificant as of February 1, 2019 and February 2, 2018 . The Company is subject to examination by various foreign and domestic taxing authorities. There are ongoing U.S. state audits covering tax years 2013 to 2017 . An audit of the Company’s Canadian operations by the Canada Revenue Agency for fiscal years 2014 and 2015 is on-going. The Company remains subject to income tax examinations for international income taxes for fiscal years 2012 through 2017 . The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and open years. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Feb. 01, 2019 | |
Earnings Per Share | |
Earnings Per Share | 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 nonforfeitable 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 2018 , 2017 and 2016 : (In millions, except per share data) 2018 2017 2016 Basic earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 2,314 $ 3,447 $ 3,091 Less: Net earnings allocable to participating securities (7 ) (11 ) (11 ) Less: Premium paid to acquire noncontrolling interest — — (18 ) Net earnings allocable to common shares, basic $ 2,307 $ 3,436 $ 3,062 Weighted-average common shares outstanding 811 839 880 Basic earnings per common share $ 2.84 $ 4.09 $ 3.48 Diluted earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 2,314 $ 3,447 $ 3,091 Less: Net earnings allocable to participating securities (7 ) (11 ) (11 ) Less: Premium paid to acquire noncontrolling interest — — (18 ) Net earnings allocable to common shares, diluted $ 2,307 $ 3,436 $ 3,062 Weighted-average common shares outstanding 811 839 880 Dilutive effect of non-participating share-based awards 1 1 1 Weighted-average common shares, as adjusted 812 840 881 Diluted earnings per common share $ 2.84 $ 4.09 $ 3.47 As discussed in Note 4 to the consolidated financial statements, the Company paid RONA’s preferred shareholders a premium to acquire the remaining noncontrolling interest in RONA during the fourth quarter of fiscal 2016. The premium paid was accounted for as a capital transaction and as such, no loss was recognized in the Company’s consolidated financial statements. However, the premium paid represents a return on investment to RONA’s preferred shareholders and is not available to common shareholders. Therefore, the premium paid to acquire the remaining noncontrolling interest is reflected in the table above as a deduction from net earnings to compute net earnings allocable to common shares. Stock options to purchase 0.5 million , 0.5 million and 1.0 million shares of common stock for 2018 , 2017 and 2016 , respectively, were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive. |
Leases
Leases | 12 Months Ended |
Feb. 01, 2019 | |
Leases | |
Leases | Leases The Company leases facilities and land for certain facilities under agreements with original terms generally of 20 years . The leases generally contain provisions for four to six renewal options of five years each. Some lease agreements also provide for contingent rentals based on sales performance in excess of specified minimums or on changes in the consumer price index. Contingent rentals were not significant for any of the periods presented. The Company subleases certain properties that are not used in its operations. Sublease income was not significant for any of the periods presented. The future minimum rental payments required under operating leases and capitalized lease obligations having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: (In millions) Operating Leases Capitalized Lease Obligations Total 2019 $ 595 $ 133 $ 728 2020 605 87 692 2021 564 90 654 2022 519 87 606 2023 473 86 559 Later years 2,609 783 3,392 Total minimum lease payments $ 5,365 $ 1,266 $ 6,631 Less amount representing interest (492 ) Present value of minimum lease payments 774 Less current maturities (65 ) Present value of minimum lease payments, less current maturities $ 709 Rental expenses under operating leases were $616 million , $626 million and $549 million in 2018 , 2017 and 2016 , respectively, and were recognized within SG&A expense. Excluded from these amounts are rental expenses associated with closed locations which were recognized as exit costs in the period of closure. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Feb. 01, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 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 February 1, 2019 , the Company had non-cancellable commitments of $1.0 billion related to certain marketing and information technology programs, and purchases of merchandise inventory. Payments under these commitments are scheduled to be made as follows: 2019, $564 million ; 2020, $352 million ; 2021, $86 million ; 2022, $20 million ; thereafter, $0 million . At February 1, 2019 , the Company held standby and documentary letters of credit issued under banking arrangements which totaled $59 million . The majority of the Company’s letters of credit were issued for insurance and construction contracts. |
Related Parties
Related Parties | 12 Months Ended |
Feb. 01, 2019 | |
Related Parties | |
Related Parties | Related Parties A member of the Company’s Board of Directors also serves on the Board of Directors of a vendor that provides branded consumer packaged goods to the Company. The Company purchased products from this vendor in the amount of $156 million in 2018 , $149 million in 2017 , and $124 million in 2016 . Amounts payable to this vendor were insignificant at February 1, 2019 and February 2, 2018 . A member of the Company’s Board of Directors also serves on the Board of Directors of a vendor that provides certain services to the Company related to health and welfare benefit plans. The Company made payments to this vendor in the amount of $2 million in 2018 , $14 million in 2017 , and $59 million in 2016 . Amounts payable to this vendor were insignificant at February 1, 2019 and February 2, 2018 . 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 $91 million in 2018. Amounts payable to this vendor were insignificant at February 1, 2019 . This was not considered a related party relationship in 2017 or 2016. |
Other Information
Other Information | 12 Months Ended |
Feb. 01, 2019 | |
Other Information | |
Other Information | Other Information Net interest expense is comprised of the following: (In millions) 2018 2017 2016 Long-term debt $ 582 $ 582 $ 583 Capitalized lease obligations 58 56 53 Interest income (28 ) (16 ) (12 ) Interest capitalized (3 ) (5 ) (4 ) Interest on tax uncertainties 3 (3 ) 2 Other 12 19 23 Interest - net $ 624 $ 633 $ 645 Supplemental disclosures of cash flow information: (In millions) 2018 2017 2016 Cash paid for interest, net of amount capitalized $ 635 $ 654 $ 619 Cash paid for income taxes, net $ 1,316 $ 1,673 $ 2,217 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 44 $ 97 $ 86 Cash dividends declared but not paid $ 385 $ 340 $ 304 Sales by product category: 2018 2017 2016 (Dollars in millions) Total Sales % Total Sales % Total Sales % Lumber & Building Materials $ 9,968 14 % $ 9,517 14 % $ 8,513 13 % Appliances 8,391 12 7,696 11 7,037 11 Seasonal & Outdoor Living 7,352 10 7,162 10 6,998 11 Tools & Hardware 6,906 10 6,723 10 6,376 10 Fashion Fixtures 6,351 9 6,424 9 6,303 10 Rough Plumbing & Electrical 6,327 9 6,142 9 5,741 9 Lawn & Garden 5,433 8 5,222 8 5,091 8 Millwork 5,381 8 5,308 8 5,238 8 Paint 5,263 7 5,297 8 5,171 8 Flooring 4,282 6 4,363 6 4,227 6 Kitchens 3,700 5 3,642 5 3,532 5 Other 1,955 2 1,123 2 790 1 Totals $ 71,309 100 % $ 68,619 100 % $ 65,017 100 % |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Feb. 01, 2019 | |
Derivative Instruments | |
Derivative Instruments | Derivative Instruments In February 2016, the Company entered into an option to purchase 3.2 billion Canadian dollars in order to manage the foreign currency exchange rate risk on the consideration to be paid for the RONA acquisition. This option contract was not accounted for as a hedging instrument, and gains and losses resulting from changes in fair value and settlement were included in SG&A expense in the accompanying consolidated statements of earnings. The cash flows related to this option were included within investing activities in the accompanying consolidated statements of cash flows. The premium paid for the foreign currency exchange option contract was $103 million . The option contract was settled during the second quarter of fiscal year 2016 for $179 million , resulting in a total realized gain of $76 million for the fiscal year ended February 3, 2017. The Company’s other derivative instruments, and related activity, were not material in any of the periods presented. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended |
Feb. 01, 2019 | |
Schedule II - Valuation and Qualifying Accounts and Reserves | |
Schedule II - Valuation and Qualifying Accounts and Reserves | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (In millions) Balance at beginning of period Charges to costs and expenses Deductions Balance at end of period February 1, 2019: Reserve for loss on obsolete inventory $ 77 $ 1 1 $ — $ 78 Reserve for inventory shrinkage 212 478 (468 ) 2 222 Reserve for sales returns 71 123 3 — 194 Deferred tax valuation allowance 475 94 4 — 569 Self-insurance liabilities 890 1,530 (1,467 ) 5 953 Reserve for exit activities 60 384 (83 ) 6 361 February 2, 2018: Reserve for loss on obsolete inventory $ 59 $ 18 1 $ — $ 77 Reserve for inventory shrinkage 189 456 (433 ) 2 212 Reserve for sales returns 71 — — 71 Deferred tax valuation allowance 578 — (103 ) 4 475 Self-insurance liabilities 831 1,547 (1,488 ) 5 890 Reserve for exit activities 66 19 (25 ) 6 60 February 3, 2017: Reserve for loss on obsolete inventory $ 46 $ 13 1 $ — $ 59 Reserve for inventory shrinkage 171 397 (379 ) 2 189 Reserve for sales returns 66 5 3 — 71 Deferred tax valuation allowance 447 131 4 — 578 Self-insurance liabilities 883 1,418 (1,470 ) 5 831 Reserve for exit activities 67 47 (48 ) 6 66 1 Represents the net increase/(decrease) in the required reserve based on the Company’s evaluation of obsolete inventory. 2 Represents the actual inventory shrinkage experienced at the time of physical inventories. 3 Represents the net increase in the required reserve based on the Company’s evaluation of anticipated merchandise returns. The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), effective February 3, 2018. Under ASU 2014-09, the sales returns reserve is presented on a gross basis, with a separate asset and liability in the consolidated balance sheet. Reporting periods prior to the adoption of ASU 2014-09 reflect the sales returns reserve on a net basis. For fiscal year 2018, the net increase in the reserve is primarily due to the change from net presentation to gross presentation related to the adoption of the revenue recognition standard, as well as changes in the Company’s evaluation of anticipated merchandise returns. 4 Represents an increase/(decrease) in the required reserve based on the Company’s evaluation of deferred tax assets. 5 Represents claim payments for self-insured claims. 6 Represents lease payments, net of sublease income. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 01, 2019 | |
Summary of Significant Accounting Policies | |
Fiscal Year | Fiscal Year - The Company’s fiscal year ends on the Friday nearest the end of January. Fiscal years 2018 and 2017 each contained 52 weeks and fiscal 2016 contained 53 weeks. All references herein for the years 2018 , 2017 , and 2016 represent the fiscal years ended February 1, 2019 , February 2, 2018 , and February 3, 2017 , respectively. |
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled operating subsidiaries. All intercompany accounts and transactions have been eliminated. During the first quarter of fiscal year 2018, the Company conformed the financial reporting calendar of a subsidiary, which did not have a significant effect on the consolidated financial statements. |
Foreign Currency | 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’ equity in accumulated other comprehensive income/loss. Gains and losses from foreign currency transactions are included in selling, general and administrative (SG&A) expense. |
Use of Estimates | 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 - 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 - Investments generally consist of money market funds, corporate debt securities, and agency securities, all of which are classified as available-for-sale. Available-for-sale securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income/loss. Gross unrealized gains and losses were not significant for any of the periods presented. The proceeds from sales of available-for-sale securities were $506 million , $523 million , and $505 million for 2018 , 2017 , and 2016 , respectively. Gross realized gains and losses on the sale of available-for-sale securities were not significant for any of the periods presented. 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. Investments classified as long-term at February 1, 2019 , will mature in one to 16 years, based on stated maturity dates. The Company classifies as investments restricted balances primarily pledged as collateral for the Company’s extended protection plan program. Restricted balances included in short-term investments were $218 million at February 1, 2019 , and $86 million at February 2, 2018 . Restricted balances included in long-term investments were $256 million at February 1, 2019 , and $381 million at February 2, 2018 . |
Merchandise Inventory | Merchandise Inventory - The majority of the Company’s inventory is stated at the lower of cost and net realizable value using the first-in, first-out method of inventory accounting. Inventory for certain subsidiaries representing approximately 7% and 10% of the consolidated inventory balances as of February 1, 2019 and February 2, 2018 , respectively, are stated at lower of cost and net realizable value using other inventory methods, including the weighted average cost method and the retail inventory method. 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 anticipated loss associated with selling inventories below cost. 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 obsolescence in the near term, and management has the ability to adjust purchasing practices based on anticipated sales trends and general economic conditions. However, changes in consumer purchasing patterns could result in the need for additional reserves. |
Merchandise Inventory, Shrink Reserve | 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. |
Merchandise Inventory, Vendor Funds | The Company receives funds from vendors in the normal course of business, principally as a result of purchase volumes, sales, early payments, or 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 complexity and 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 | Derivative Financial Instruments - The Company occasionally utilizes derivative financial instruments to manage certain business risks. However, the amounts were not material to the Company’s consolidated financial statements in any of the years presented. |
Sale of Business Accounts Receivable and Other Credit Programs | Sale of Business Accounts Receivable - The Company has an agreement with Synchrony Bank (Synchrony) under which Synchrony purchases at face value commercial business accounts receivable originated by the Company and services these accounts. The Company primarily accounts for these transfers as sales of the accounts receivable. When the Company transfers its commercial business accounts receivable, it retains 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 is 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 is 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. Total commercial business accounts receivable sold to Synchrony were $3.1 billion in 2018 , $3.1 billion in 2017 , and $2.8 billion in 2016 . The Company recognized losses of $41 million in 2018 , $39 million in 2017 , and $32 million in 2016 on these receivable sales as SG&A expense, which primarily relates to the fair value of obligations related to servicing costs that are remitted to Synchrony monthly. At February 1, 2019 and February 2, 2018 , the fair value of the retained interests was determined based on the present value of expected future cash flows and was insignificant. Other Credit Programs - Sales generated through the Company’s proprietary credit cards are not reflected in receivables. Under an agreement with 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. Portfolio income associated with the propriety credit program is included in sales in the consolidated statements of earnings as of the adoption of Accounting Standards Update 2014-09 (ASU 2014-09) in fiscal 2018. ASU 2014-09 was adopted using the modified retrospective approach; therefore, fiscal 2017 and fiscal 2016 present portfolio income associated with the proprietary credit program within SG&A expense. |
Property and Depreciation | 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 capital lease and leasehold improvements. Equipment primarily includes store racking and displays, computer hardware and software, forklifts, vehicles, and other store equipment . Depreciation is provided over the estimated useful lives of the depreciable assets. Assets are depreciated using the straight-line method. Leasehold improvements and assets under capital lease are depreciated over the shorter of their estimated useful lives or the term of the related lease, which may include one or more option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. During the term of a lease, if leasehold improvements are placed in service significantly after the inception of the lease, the Company depreciates these leasehold improvements over the shorter of the useful life of the leasehold assets or a term that includes lease renewal periods deemed to be reasonably assured at the time the leasehold improvements are placed into service. The amortization of these assets is included in depreciation and amortization expense in the consolidated financial statements. |
Long-Lived Asset Impairment | Long-Lived Asset Impairment/Exit Activities - 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. 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. Excess properties that are expected to be sold within the next 12 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 re-evaluated. Impairment losses are included in SG&A expense in the consolidated statements of earnings. |
Exit Activities | When locations under operating leases are closed, a liability is recognized for the fair value of future contractual obligations, including future minimum lease payments, property taxes, utilities, common area maintenance, and other ongoing expenses, net of estimated sublease income and other recoverable items. Subsequent changes to the liabilities, including a change resulting from a revision to either the timing or the amount of estimated cash flows, are recognized in the period of change. Expenses associated with exit activities are included in SG&A expense in the consolidated statement of earnings. |
Goodwill | Goodwill - Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less liabilities assumed, in a business combination. The Company reviews goodwill for impairment at the reporting unit level, which is one level below the operating segment level. Goodwill is not amortized but is evaluated for impairment at least annually on the first day of the fourth quarter or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. The evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If, after assessing qualitative factors, we determine it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the quantitative goodwill impairment test is performed. The quantitative goodwill impairment test used to identify potential impairment compares the fair value of a reporting unit with its carrying amount, including goodwill. Fair value represents the price a market participant would be willing to pay in a potential sale of the reporting unit and is based on a combination of an income approach, based on discounted future cash flows, and a market approach, based on market multiples applied to free cash flow. If the fair value exceeds carrying value, then no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, in accordance with Accounting Standards Update 2017-04 which was early adopted by the Company in fiscal 2018, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Any impairment identified is included within SG&A expense in the consolidated statements of earnings. The income tax effect from any tax deductible goodwill on the carrying amount of the reporting unit, if applicable, is considered in determining the goodwill impairment loss. A reporting unit is an operating segment or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. During fiscal 2018, goodwill was allocated to the following reporting units: U.S. Home Improvement, Canada-Retail, and Canada-Distribution. |
Equity Method Investments | Equity Method Investments - The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other assets (non-current) in the accompanying consolidated balance sheets. The balance is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance is decreased for its equity in losses of the investees, for distributions received that are not in excess of the carrying amount of the investments, and for any other than temporary impairment losses recognized. Equity method investments were not significant as of February 1, 2019 and February 2, 2018 . The Company’s equity in earnings and losses of the investees are included in SG&A expense, and were not significant for any of the periods presented. Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that a decline in value has occurred that is other than temporary. Evidence considered in this evaluation includes, but would not necessarily be limited to, the financial condition and near-term prospects of the investee, recent operating trends and forecasted performance of the investee, market conditions in the geographic area or industry in which the investee operates and the Company’s strategic plans for holding the investment in relation to the period of time expected for an anticipated recovery of its carrying value. Investments that are determined to have a decline in value deemed to be other than temporary are written down to estimated fair value. |
Leases | Leases - For lease agreements that provide for escalating rent payments or free-rent occupancy periods, the Company recognizes rent expense on a straight-line basis over the non-cancellable lease term and option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. The lease term commences on the date that the Company takes possession of or controls the physical use of the property. Deferred rent is included in other liabilities (non-current) on the consolidated balance sheets. When the Company renegotiates and amends a lease to extend the non-cancellable lease term prior to the date at which it would have been required to exercise or decline a term extension option, the amendment is treated as a new lease. The new lease begins on the date the lease amendment is entered into and ends on the last date of the non-cancellable lease term, as adjusted to include any option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease amendment, to be reasonably assured. The new lease is classified as operating or capital under the authoritative guidance through use of assumptions regarding residual value, economic life, incremental borrowing rate, and fair value of the leased asset(s) as of the date of the amendment. |
Accounts Payable | Accounts Payable - The Company has an agreement with a third party to provide an accounts payable tracking system 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 this arrangement is to capture overall supply chain 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 this arrangement. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this arrangement for those payment obligations that have been financed by suppliers. |
Self-Insurance | 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 insurance coverage to limit the exposure arising from these claims. The Company is also self-insured for certain losses relating to extended protection plan and 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. The total self-insurance liability, including the current and non-current portions, was $953 million and $890 million at February 1, 2019 , and February 2, 2018 , respectively. 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. |
Income Taxes | 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 financial statements. The Company records any applicable penalties related to tax issues within the income tax provision. |
Shareholders' Equity | Shareholders’ Equity - 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 retired and 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 retained earnings. |
Cost of Sales | Cost of Sales 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 payroll and benefit costs and occupancy costs; n Costs of installation services provided; n Costs associated with delivery of products directly from vendors to customers by third parties; n Costs associated with inventory shrinkage and obsolescence; n Costs of services performed under the extended protection plan. |
Selling, General and Administrative | Selling, General and Administrative n Payroll and benefit costs for retail and corporate employees; n Occupancy costs of retail and corporate facilities; n Advertising; n Costs associated with delivery of products from stores and distribution centers to customers; n Third-party, in-store service costs; n Tender costs, including bank charges, costs associated with credit card interchange fees and amounts associated with accepting the Company’s proprietary credit cards; n Costs associated with self-insured plans, and premium costs for stop-loss coverage and fully insured plans; n Long-lived asset impairment losses and gains/losses on disposal of assets; n Other administrative costs, such as supplies, and travel and entertainment. |
Advertising | Advertising - Costs associated with advertising are charged to expense as incurred. |
Store Opening Costs | Store Opening Costs - Costs of opening new or relocated retail stores, which include payroll and supply costs incurred prior to store opening and grand opening advertising costs, are charged to expense as incurred. |
Comprehensive Income | Comprehensive Income - The Company reports comprehensive income in its consolidated statements of comprehensive income and consolidated statements of shareholders’ equity. Comprehensive income represents changes in shareholders’ equity from non-owner sources and is comprised of net earnings adjusted primarily for foreign currency translation adjustments. |
Segment Information | Segment Information - The Company’s home improvement retail operations represent a single reportable segment. Key operating decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s home improvement retail and hardware stores sell similar products and services, use similar processes to sell those products and services, and sell their products and services to similar classes of customers. In addition, the Company’s operations exhibit similar long-term economic characteristics. |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted - Effective November 3, 2018, the Company early adopted Accounting Standards Update 2017-04 (ASU), Intangibles-Goodwill and Other (Topic 350) . The ASU eliminates Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation to the identified assets and liabilities of the reporting unit to measure goodwill impairment. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance by the Company did not have a material impact on its consolidated financial statements. Effective February 3, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , and all the related amendments, using the modified retrospective method. ASU 2014-09 requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Upon adoption of ASU 2014-09, the Company recorded an immaterial adjustment to the opening balance of retained earnings as of February 3, 2018, with related adjustments to other current assets, deferred revenue, accounts payable, other current liabilities, and related tax effects. The adjustment to retained earnings primarily relates to the change in revenue recognition related to gift card breakage. The adoption of the guidance also required a change in the timing of when installation services are recognized, the presentation of sales return reserve on the consolidated balance sheet, and a change in the presentation of the Company’s profit sharing income from its proprietary credit program. We applied ASU 2014-09 only to contracts that were not completed prior to fiscal 2018. Results for reporting periods beginning after February 2, 2018 are presented under ASU 2014-09, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods. See Note 3 for additional details of the Company’s revenues. The impact of adopting the new revenue recognition guidance on our consolidated statement of earnings is as follows: Twelve Months Ended February 1, 2019 Consolidated Statement of Earnings (in millions) As Reported Under Historical Guidance Impact of Adopting ASU 2014-09 Net Sales $ 71,309 $ 70,586 $ 723 Cost of sales 48,401 48,481 (80 ) Gross margin 22,908 22,105 803 Selling, general and administrative 17,413 16,610 803 Operating income 4,018 4,018 — Pre-tax earnings 3,394 3,394 — Net earnings 2,314 2,314 — The impact of adopting the new revenue recognition guidance to assets and liabilities on our consolidated balance sheet are as follows: Balance at February 1, 2019 As Reported Under Historical Guidance Impact of Adopting ASU 2014-09 Assets Other current assets $ 938 $ 811 $ 127 Liabilities Accounts payable 8,279 8,272 7 Deferred revenue 1,299 1,371 (72 ) Other current liabilities 2,425 2,281 144 Accounting Pronouncements Not Yet Adopted - In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. In July 2018, the FASB issued ASU 2018-11, which allows a transition election to not restate comparative periods for the effects of applying the new standard. This transition election permits entities to change the date of initial application of the standard to the beginning of the year of adoption and to recognize the effects of applying Topic 842 as a cumulative-effect adjustment to the opening balance of retained earnings. Certain qualitative and quantitative disclosures are also required. The Company will adopt this ASU and related amendments on February 2, 2019. The Company will elect the optional transition approach and recognize the cumulative impact of adoption in the opening balance of retained earnings to beginning fiscal year 2019. The Company currently estimates the impact of adopting Topic 842 will result in an increase in lease-related assets of $3.2 billion to $3.6 billion and an increase in lease-related liabilities of $3.5 billion to $3.9 billion on its consolidated balance sheet, as a result of the requirement to recognize right-of-use assets and lease liabilities for operating leases. The Company does not expect a material impact to the Company’s consolidated statements of earnings, comprehensive income, shareholders’ equity, or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Summary of Significant Accounting Policies | |
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill for 2018 , 2017 , and 2016 were as follows: (In millions) 2018 2017 2016 Goodwill, balance at beginning of year $ 1,307 $ 1,082 $ 154 Acquisitions 1 — 160 1,015 Impairment (952 ) — (46 ) Other adjustments 2 (52 ) 65 (41 ) Goodwill, balance at end of year $ 303 $ 1,307 $ 1,082 1 Goodwill recorded for 2017 acquisitions relates to Maintenance Supply Headquarters. Goodwill recorded for 2016 acquisitions primarily relates to RONA. See Note 4 for additional information regarding these acquisitions. 2 Other adjustments primarily consist of changes in the goodwill balance as a result of foreign currency translation. |
Gross carrying amounts and cumulative goodwill impairment losses | Gross carrying amounts and cumulative goodwill impairment losses are as follows: February 1, 2019 February 2, 2018 (In millions) Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment Goodwill $ 1,302 $ (999 ) $ 1,354 $ (47 ) |
Other current liabilities | Other Current Liabilities - Other current liabilities on the consolidated balance sheets consist of: (In millions) February 1, 2019 February 2, 2018 Accrued dividends $ 385 $ 340 Self-insurance liabilities 378 347 Sales return reserve 194 71 Accrued interest 184 184 Sales tax liabilities 179 144 Accrued property taxes 108 109 Other 997 755 Total $ 2,425 $ 1,950 |
Schedule of Accounting Pronouncements Recently Adopted | The impact of adopting the new revenue recognition guidance on our consolidated statement of earnings is as follows: Twelve Months Ended February 1, 2019 Consolidated Statement of Earnings (in millions) As Reported Under Historical Guidance Impact of Adopting ASU 2014-09 Net Sales $ 71,309 $ 70,586 $ 723 Cost of sales 48,401 48,481 (80 ) Gross margin 22,908 22,105 803 Selling, general and administrative 17,413 16,610 803 Operating income 4,018 4,018 — Pre-tax earnings 3,394 3,394 — Net earnings 2,314 2,314 — The impact of adopting the new revenue recognition guidance to assets and liabilities on our consolidated balance sheet are as follows: Balance at February 1, 2019 As Reported Under Historical Guidance Impact of Adopting ASU 2014-09 Assets Other current assets $ 938 $ 811 $ 127 Liabilities Accounts payable 8,279 8,272 7 Deferred revenue 1,299 1,371 (72 ) Other current liabilities 2,425 2,281 144 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Revenue Recognition | |
Disaggregation of Revenue | The following table presents the Company’s sources of revenue: (In millions) Year Ended February 1, 2019 February 2, 2018 February 3, 2017 Products $ 67,197 $ 65,421 $ 62,053 Services 2,539 2,469 2,505 Other 1,573 729 459 Net sales $ 71,309 $ 68,619 $ 65,017 The following table presents the Company’s net sales disaggregated by merchandise division: Year Ended February 1, 2019 February 2, 2018 February 3, 2017 (In millions) Total Sales % Total Sales % Total Sales % Building & Maintenance ¹ $ 28,582 40 $ 27,689 41 $ 25,868 40 Home Décor ² 27,987 39 27,422 39 26,269 40 Seasonal ³ 12,786 18 12,384 19 12,090 19 Other 1,955 3 1,124 1 790 1 Total $ 71,309 100 $ 68,619 100 $ 65,017 100 1 Building & Maintenance includes the following product categories: Lumber & Building Materials, Millwork, Rough Plumbing & Electrical, and Tools & Hardware. 2 Home Décor includes the following product categories: Appliances, Fashion Fixtures, Flooring, Kitchens, and Paint. 3 Seasonal includes the following product categories: Lawn & Garden and Seasonal & Outdoor Living. The following table presents the Company’s net sales disaggregated by geographical area: (In millions) Year Ended February 1, 2019 February 2, 2018 February 3, 2017 United States $ 65,872 $ 63,263 $ 61,333 International 5,437 5,356 3,684 Net Sales $ 71,309 $ 68,619 $ 65,017 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Maintenance Supply Headquarters | |
Business Acquisition [Line Items] | |
Acquisitions | The following table summarizes the aggregate purchase price allocation: (In millions) June 23, 2017 Allocation: Cash acquired $ 4 Merchandise inventory 68 Other current assets 36 Property 12 Goodwill 160 Other assets 260 Accounts payable (18 ) Other current liabilities (9 ) Net assets acquired $ 513 |
RONA inc | |
Business Acquisition [Line Items] | |
Acquisitions | The following represents the aggregate purchase price allocation which includes purchase accounting adjustments made during the measurement period: (In millions) May 20, 2016 Purchase price: Cash paid to common shareholders $ 1,999 Cash paid to debt holders 368 Total cash paid $ 2,367 Allocation: Cash acquired $ 83 Accounts receivable 260 Merchandise inventory 814 Property 897 Goodwill 971 Other assets 437 Other current liabilities (619 ) Long-term liabilities (367 ) Noncontrolling interest (109 ) Net assets acquired $ 2,367 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Fair Value Measurements | |
Fair value measurements - recurring basis | The following table presents the Company’s financial assets measured at fair value on a recurring basis. The fair values of these instruments approximated amortized costs. Fair Value Measurements at (In millions) Measurement Level February 1, 2019 February 2, 2018 Available-for-sale securities: Money market funds Level 1 $ 207 $ 86 Agency securities Level 2 10 — Corporate debt securities Level 2 1 — Certificates of deposit Level 1 — 16 Total short-term investments $ 218 $ 102 Available-for-sale securities: Corporate debt securities Level 2 $ 191 $ — Agency securities Level 2 $ 65 $ — Municipal floating rate obligations Level 2 $ — $ 407 Certificates of deposit Level 1 — 1 Total long-term investments $ 256 $ 408 |
Fair value measurements - nonrecurring basis | The following table presents the Company’s assets measured at estimated fair value on a nonrecurring basis and the resulting impairment losses included in earnings, excluding costs to sell for excess properties held-for-sale. Because these assets subject to impairment were not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at February 1, 2019 . Fair Value Measurements - Nonrecurring Basis February 1, 2019 (In millions) Fair Value Measurements Impairment Losses Assets-held-for-use: Operating locations $ 473 $ (331 ) Assets-held-for-sale: Mexico operating locations $ 79 $ (222 ) Goodwill (Note 1) $ 2,851 $ (952 ) Total $ 3,403 $ (1,505 ) |
Fair value of financial instruments | Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding capitalized lease obligations, are as follows: February 1, 2019 February 2, 2018 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,721 $ 14,473 $ 14,961 $ 15,608 Mortgage notes (Level 2) 6 6 6 7 Long-term debt (excluding capitalized lease obligations) $ 14,727 $ 14,479 $ 14,967 $ 15,615 |
Property and Accumulated Depr_2
Property and Accumulated Depreciation (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Property and Accumulated Depreciation | |
Property and Accumulated Depreciation | Property is summarized by major class in the following table: (In millions) Estimated February 1, 2019 February 2, 2018 Cost: Land N/A $ 7,196 $ 7,414 Buildings and building improvements 5-40 18,052 18,521 Equipment 2-15 10,090 10,475 Construction in progress N/A 525 530 Total cost 35,863 36,940 Accumulated depreciation (17,431 ) (17,219 ) Property, less accumulated depreciation $ 18,432 $ 19,721 |
Exit Activities (Tables)
Exit Activities (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Exit Activities | |
Schedule of exit activity expenses | A summary of the significant components of charges associated with the exit activities discussed above, are as follows: Costs Incurred Three Months Ended Three Months Ended Three Months Ended Year Ended (In millions) August 3, 2018 November 2, 2018 February 1, 2019 February 1, 2019 Long-lived asset impairments $ 206 $ 121 $ 222 $ 549 Lease obligation costs for closed locations — 9 298 307 Accelerated depreciation and amortization — 103 50 153 Severance costs — 32 26 58 Discontinued project write-offs 24 10 — 34 Inventory adjustments to net realizable value — 5 2 7 Other closing costs — — 27 27 Total $ 230 $ 280 $ 625 $ 1,135 The following table summarizes store closing lease obligations activity during the twelve months ended February 1, 2019: 2018 (In millions) Lease obligations Accrual for exit activities, balance at the beginning of period $ 60 Additions to the accrual - net 365 Cash payments (86 ) Adjustments 1 22 Accrual for exit activities, balance at the end of period $ 361 1 Adjustments represents changes in estimates around sublease assumptions. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Long-Term Debt | |
Long-Term Debt | Debt Category Weighted-Average Interest Rate at February 1, 2019 February 1, 2019 February 2, 2018 Secured debt: Mortgage notes due through fiscal 2027 1 5.26 % $ 6 $ 6 Unsecured debt: Notes due through fiscal 2023 3.43 % 3,832 4,079 Notes due fiscal 2024-2028 3.30 % 4,393 4,389 Notes due fiscal 2029-2033 6.50 % 309 309 Notes due fiscal 2034-2038 5.96 % 897 897 Notes due fiscal 2039-2043 4.96 % 1,411 1,410 Notes due fiscal 2044-2048 4.01 % 3,879 3,877 Capitalized lease obligations due through fiscal 2038 774 891 Total long-term debt 15,501 15,858 Less current maturities (1,110 ) (294 ) Long-term debt, excluding current maturities $ 14,391 $ 15,564 1 Real properties with an aggregate book value of $16 million were pledged as collateral at February 1, 2019 , for secured debt. |
Schedule of unsecured notes issued in fiscal 2016 | Unsecured notes issued during 2016 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) April 2016 $ 250 April 2019 Floating Floating $ 1 April 2016 $ 350 April 2019 Fixed 1.150% $ 1 April 2016 $ 1,350 April 2026 Fixed 2.500% $ 12 April 2016 $ 1,350 April 2046 Fixed 3.700% $ 19 |
Schedule of unsecured notes issued in fiscal 2017 | Unsecured notes issued during 2017 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) May 2017 $ 1,500 May 2027 Fixed 3.100% $ 9 May 2017 $ 1,500 May 2047 Fixed 4.050% $ 23 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Shareholders Equity | |
Accelerated Share Repurchases | The terms of each ASR agreement entered into during the last three fiscal years, structured as outlined above, follow (in millions): Agreement Execution Date ASR Settlement Date ASR Agreement Amount Initial Shares Delivered Additional Shares Delivered at Settlement Total Shares Delivered Q1 2016 Q2 2016 $ 500 6.2 0.6 6.8 Q2 2016 Q3 2016 500 5.3 1.0 6.3 Q3 2016 Q3 2016 250 2.8 0.6 3.4 Q4 2016 Q4 2016 190 2.4 0.2 2.6 Q1 2017 Q1 2017 500 5.3 0.8 6.1 Q2 2017 Q2 2017 500 5.2 1.2 6.4 Q3 2017 Q3 2017 250 2.9 0.3 3.2 Q2 2018 Q2 2018 550 4.8 0.8 5.6 Q3 2018 Q3 2018 310 2.5 0.3 2.8 Q4 2018 Q1 2019 270 2.6 0.3 2.9 |
Schedule of share repurchases | Shares repurchased for 2018 , 2017 and 2016 were as follows: 2018 2017 2016 (In millions) Shares Cost 1 Shares Cost 1 Shares Cost 1 Share repurchase program 31.2 $ 2,999 39.1 $ 3,133 46.7 $ 3,500 Shares withheld from employees 0.5 46 0.5 41 1.0 77 Total share repurchases 31.7 $ 3,045 39.6 $ 3,174 47.7 $ 3,577 1 Reductions of $2.8 billion , $2.9 billion , and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2018 , 2017 , and 2016, respectively. |
Accounting for Share-Based Pa_2
Accounting for Share-Based Payments (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Accounting for Share-Based Payments | |
Schedule of Option Pricing Assumptions | The weighted average assumptions used in the Black-Scholes option-pricing model and weighted-average grant date fair value for options granted in 2018 , 2017 , and 2016 are as follows: 2018 2017 2016 Weighted-average assumptions used: Expected volatility 23.3 % 23.6 % 24.0 % Dividend yield 1.71 % 1.68 % 1.66 % Risk-free interest rate 2.71 % 2.14 % 1.42 % Expected term, in years 6.58 6.43 6.44 Weighted-average grant date fair value $ 21.12 $ 18.30 $ 15.00 |
Schedule of Stock Option Activity | Transactions related to stock options for the fiscal year ended February 1, 2019 are summarized as follows: Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at February 2, 2018 2,815 $ 60.84 Granted 1,021 90.75 Canceled, forfeited or expired (385 ) 79.63 Exercised (760 ) 55.95 Outstanding at February 1, 2019 2,691 $ 70.87 7.10 $ 72,613 Vested and expected to vest at February 1, 2019 1 2,610 $ 70.18 7.04 $ 72,067 Exercisable at February 1, 2019 1,719 $ 60.49 6.03 $ 62,943 1 Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied. |
Schedule of Restricted Stock Awards Activity | Transactions related to restricted stock awards for the fiscal year ended February 1, 2019 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 2, 2018 1,896 $ 73.21 Granted 1,021 86.99 Vested (772 ) 70.93 Canceled or forfeited (355 ) 77.73 Nonvested at February 1, 2019 1,790 $ 81.16 |
Schedule of Performance Share Units Pricing Assumptions | The weighted-average assumptions used in the Monte Carlo simulations for these awards granted in 2018 and 2017 are as follows: 2018 2017 Weighted-average assumptions used: Expected volatility 22.8 % 20.8 % Dividend yield 1.77 % 1.62 % Risk-free interest rate 2.36 % 1.46 % Expected term, in years 2.81 2.83 |
Schedule of Performance Share Units Activity | Transactions related to performance share units classified as equity awards for the fiscal year ended February 1, 2019 are summarized as follows: Units 1 Weighted-Average Grant-Date Fair Value Per Unit Nonvested at February 2, 2018 698 $ 81.31 Granted 320 82.22 Vested (144 ) 71.22 Canceled or forfeited (261 ) 82.09 Nonvested at February 1, 2019 613 $ 83.83 ¹ The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of February 1, 2019 , the maximum number of nonvested units that could vest under the provisions of the agreements was 1.2 million for the RONCAA awards. |
Schedule of Restricted Stock Unit Activity | Transactions related to restricted stock units for the fiscal year ended February 1, 2019 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 2, 2018 277 $ 69.21 Granted 182 80.32 Vested (63 ) 66.62 Canceled or forfeited (67 ) 73.65 Nonvested at February 1, 2019 329 $ 74.95 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Income Taxes | |
Effective Income Tax Rate Reconciliation | The following is a reconciliation of the federal statutory tax rate to the effective tax rate: 2018 2017 2016 Statutory federal income tax rate 1 21.0 % 33.7 % 35.0 % State income taxes, net of federal tax benefit 4.8 2.9 3.6 Valuation allowance - Australian joint venture — (0.6 ) 2.0 Goodwill impairment 5.5 — — Mexico impairment 1.5 — — Other, net (1.0 ) 1.2 (0.1 ) Effective tax rate 31.8 % 37.2 % 40.5 % 1 The Company utilized a blended rate in 2017 due to the Tax Cuts and Job Act enacted on December 22, 2017. |
Components of Income Tax Provision | The components of the income tax provision are as follows: (In millions) 2018 2017 2016 Current: Federal $ 963 $ 1,734 $ 1,824 State 274 252 275 Total current 1 1,237 1,986 2,099 Deferred: Federal (102 ) 60 6 State (55 ) (4 ) 3 Total deferred 1 (157 ) 56 9 Total income tax provision $ 1,080 $ 2,042 $ 2,108 1 Amounts applicable to foreign income taxes were insignificant for all periods presented. |
Deferred Tax Assets and Liabilities | The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows: (In millions) February 1, 2019 February 2, 2018 Deferred tax assets: Self-insurance $ 252 $ 238 Share-based payment expense 31 36 Deferred rent 58 66 Mexico impairment 74 — Capital loss carryforwards 223 225 Net operating losses 239 213 Other, net 119 124 Total deferred tax assets 996 902 Valuation allowance (569 ) (475 ) Net deferred tax assets 427 427 Deferred tax liabilities: Property (76 ) (264 ) Other, net (57 ) (23 ) Total deferred tax liabilities (133 ) (287 ) Net deferred tax asset $ 294 $ 140 |
Unrecognized Tax Benefits Reconciliation | A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows: (In millions) 2018 2017 2016 Unrecognized tax benefits, beginning of year $ — $ 6 $ 3 Additions for tax positions of prior years 10 — 3 Reductions for tax positions of prior years — (2 ) — Settlements — (1 ) — Reductions due to a lapse in applicable statute of limitations — (3 ) — Unrecognized tax benefits, end of year $ 10 $ — $ 6 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Earnings Per Share | |
Schedule of earnings per share, basic and diluted | The following table reconciles earnings per common share for 2018 , 2017 and 2016 : (In millions, except per share data) 2018 2017 2016 Basic earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 2,314 $ 3,447 $ 3,091 Less: Net earnings allocable to participating securities (7 ) (11 ) (11 ) Less: Premium paid to acquire noncontrolling interest — — (18 ) Net earnings allocable to common shares, basic $ 2,307 $ 3,436 $ 3,062 Weighted-average common shares outstanding 811 839 880 Basic earnings per common share $ 2.84 $ 4.09 $ 3.48 Diluted earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 2,314 $ 3,447 $ 3,091 Less: Net earnings allocable to participating securities (7 ) (11 ) (11 ) Less: Premium paid to acquire noncontrolling interest — — (18 ) Net earnings allocable to common shares, diluted $ 2,307 $ 3,436 $ 3,062 Weighted-average common shares outstanding 811 839 880 Dilutive effect of non-participating share-based awards 1 1 1 Weighted-average common shares, as adjusted 812 840 881 Diluted earnings per common share $ 2.84 $ 4.09 $ 3.47 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Leases | |
Future minimum lease payments | The future minimum rental payments required under operating leases and capitalized lease obligations having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: (In millions) Operating Leases Capitalized Lease Obligations Total 2019 $ 595 $ 133 $ 728 2020 605 87 692 2021 564 90 654 2022 519 87 606 2023 473 86 559 Later years 2,609 783 3,392 Total minimum lease payments $ 5,365 $ 1,266 $ 6,631 Less amount representing interest (492 ) Present value of minimum lease payments 774 Less current maturities (65 ) Present value of minimum lease payments, less current maturities $ 709 |
Other Information (Tables)
Other Information (Tables) | 12 Months Ended |
Feb. 01, 2019 | |
Other Information | |
Net interest expense | Net interest expense is comprised of the following: (In millions) 2018 2017 2016 Long-term debt $ 582 $ 582 $ 583 Capitalized lease obligations 58 56 53 Interest income (28 ) (16 ) (12 ) Interest capitalized (3 ) (5 ) (4 ) Interest on tax uncertainties 3 (3 ) 2 Other 12 19 23 Interest - net $ 624 $ 633 $ 645 |
Supplemental disclosures of cash flow information | Supplemental disclosures of cash flow information: (In millions) 2018 2017 2016 Cash paid for interest, net of amount capitalized $ 635 $ 654 $ 619 Cash paid for income taxes, net $ 1,316 $ 1,673 $ 2,217 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 44 $ 97 $ 86 Cash dividends declared but not paid $ 385 $ 340 $ 304 |
Sales by product category | Sales by product category: 2018 2017 2016 (Dollars in millions) Total Sales % Total Sales % Total Sales % Lumber & Building Materials $ 9,968 14 % $ 9,517 14 % $ 8,513 13 % Appliances 8,391 12 7,696 11 7,037 11 Seasonal & Outdoor Living 7,352 10 7,162 10 6,998 11 Tools & Hardware 6,906 10 6,723 10 6,376 10 Fashion Fixtures 6,351 9 6,424 9 6,303 10 Rough Plumbing & Electrical 6,327 9 6,142 9 5,741 9 Lawn & Garden 5,433 8 5,222 8 5,091 8 Millwork 5,381 8 5,308 8 5,238 8 Paint 5,263 7 5,297 8 5,171 8 Flooring 4,282 6 4,363 6 4,227 6 Kitchens 3,700 5 3,642 5 3,532 5 Other 1,955 2 1,123 2 790 1 Totals $ 71,309 100 % $ 68,619 100 % $ 65,017 100 % |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Changes in the carrying amount of goodwill | |||
Goodwill, balance at beginning of year | $ 1,307 | $ 1,082 | $ 154 |
Acquisitions | 0 | 160 | 1,015 |
Impairment | (952) | 0 | (46) |
Other adjustments | (52) | 65 | (41) |
Goodwill, balance at end of year | 303 | 1,307 | 1,082 |
Gross carrying amounts and cumulative goodwill impairment losses | |||
Goodwill, gross carrying amount | 1,302 | 1,354 | |
Goodwill, cumulative impairment | (999) | (47) | |
Other Current Liabilities | |||
Self-insurance liabilities | 385 | 340 | $ 304 |
Accrued dividends | 378 | 347 | |
Sales return reserve | 194 | 71 | |
Accrued Interest | 184 | 184 | |
Sales tax liabilities | 179 | 144 | |
Accrued property taxes | 108 | 109 | |
Other | 997 | 755 | |
Total | $ 2,425 | $ 1,950 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details Textual) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Feb. 01, 2019USD ($)storelocation | Oct. 28, 2016USD ($) | Feb. 01, 2019USD ($)storelocation | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | Feb. 03, 2019USD ($) | |
Investments | ||||||
Proceeds from sales of available-for-sale securities | $ 506 | $ 523 | $ 505 | |||
Restricted balances included in short-term investments | $ 218 | 218 | 86 | |||
Restricted balances included in long-term investments | $ 256 | $ 256 | $ 381 | |||
Percentage of inventory valued using methods other than FIFO | 7.00% | 7.00% | 10.00% | |||
Accounts receivable sold | $ 3,100 | $ 3,100 | 2,800 | |||
Loss on receivable sales | 41 | 39 | 32 | |||
Goodwill impairment loss | $ 952 | $ 46 | 952 | 0 | 0 | |
Payables placed on tracking system | 2,100 | 2,100 | 1,600 | |||
Payables financed by participating suppliers | 1,500 | 1,500 | 1,100 | |||
Total self insurance liability | 953 | 953 | 890 | |||
Outstanding surety bonds relating to self-insurance | 246 | 246 | 238 | |||
Advertising expenses | 963 | 968 | 893 | |||
Foreign currency translation gain (loss), net of tax | $ 209 | $ 209 | $ 11 | $ 240 | ||
Long-lived assets held outside of the U.S. as a percentage of total long-lived assets | 9.10% | 9.10% | 9.80% | 8.70% | ||
Net sales outside of the U.S. as a percentage of total sales | 7.60% | 7.80% | 5.70% | |||
Minimum | ||||||
Investments | ||||||
Maturity date of long-term investments | 1 year | |||||
Maximum | ||||||
Investments | ||||||
Maturity date of long-term investments | 16 years | |||||
Forecast | Accounting Standards Update 2016-02 | Minimum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Lease-related-assets | $ 3,200 | |||||
Lease-related liabilities | 3,500 | |||||
Forecast | Accounting Standards Update 2016-02 | Maximum | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Lease-related-assets | 3,600 | |||||
Lease-related liabilities | $ 3,900 | |||||
United States and Canada | ||||||
Investments | ||||||
Number of stores | location | 2,002 | 2,002 | ||||
Mexico | ||||||
Investments | ||||||
Number of stores | store | 13 | 13 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies Accounting Standards Updates (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net sales | $ 71,309 | $ 68,619 | $ 65,017 |
Cost of sales | 48,401 | 46,185 | 43,343 |
Gross margin | 22,908 | 22,434 | 21,674 |
Selling, general and administrative | 17,413 | 14,444 | 14,375 |
Operating income | 4,018 | 6,586 | 5,846 |
Pre-tax earnings | 3,394 | 5,489 | 5,201 |
Net earnings | 2,314 | 3,447 | $ 3,091 |
Other current assets | 938 | 689 | |
Accounts payable | 8,279 | 6,590 | |
Deferred revenue | 1,299 | 1,378 | |
Other current liabilities | 2,425 | $ 1,950 | |
Under Historical Guidance | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net sales | 70,586 | ||
Cost of sales | 48,481 | ||
Gross margin | 22,105 | ||
Selling, general and administrative | 16,610 | ||
Operating income | 4,018 | ||
Pre-tax earnings | 3,394 | ||
Net earnings | 2,314 | ||
Other current assets | 811 | ||
Accounts payable | 8,272 | ||
Deferred revenue | 1,371 | ||
Other current liabilities | 2,281 | ||
Impact of Adopting ASU 2014-09 | Accounting Standards Update 2014-09 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Net sales | 723 | ||
Cost of sales | (80) | ||
Gross margin | 803 | ||
Selling, general and administrative | 803 | ||
Operating income | 0 | ||
Pre-tax earnings | 0 | ||
Net earnings | 0 | ||
Other current assets | 127 | ||
Accounts payable | 7 | ||
Deferred revenue | (72) | ||
Other current liabilities | $ 144 |
Change in Accounting Principle
Change in Accounting Principle (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales | $ 48,401 | $ 46,185 | $ 43,343 |
Selling, general and administrative | 17,413 | 14,444 | 14,375 |
Depreciation and amortization | 1,477 | 1,404 | 1,453 |
Restatement Adjustment | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cost of sales | 1,200 | 975 | 790 |
Selling, general and administrative | (1,100) | (932) | (754) |
Depreciation and amortization | $ (39) | $ (43) | $ (36) |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 71,309 | $ 68,619 | $ 65,017 |
Net sales, percentage | 100.00% | 100.00% | 100.00% |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 65,872 | $ 63,263 | $ 61,333 |
International | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 5,437 | 5,356 | 3,684 |
Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 67,197 | 65,421 | 62,053 |
Services | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 2,539 | 2,469 | 2,505 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 1,573 | 729 | 459 |
Building & Maintenance | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 28,582 | $ 27,689 | $ 25,868 |
Net sales, percentage | 40.00% | 41.00% | 40.00% |
Home Decor | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 27,987 | $ 27,422 | $ 26,269 |
Net sales, percentage | 39.00% | 39.00% | 40.00% |
Seasonal | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 12,786 | $ 12,384 | $ 12,090 |
Net sales, percentage | 18.00% | 19.00% | 19.00% |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 1,955 | $ 1,124 | $ 790 |
Net sales, percentage | 3.00% | 1.00% | 1.00% |
Revenue Recognition (Details Te
Revenue Recognition (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Disaggregation of Revenue [Line Items] | |||
Anticipated sales returns | $ 194 | ||
Right of return assets | 127 | ||
Inventory valuation reserves | $ 71 | ||
Up-front payment arrangement | 790 | 831 | |
Liability for stored-value cards | 509 | 547 | |
Deferred revenue from extended protection plans recognized in sales | 390 | 368 | $ 353 |
Accrual for claims incurred | $ 183 | $ 161 | $ 141 |
Minimum | |||
Disaggregation of Revenue [Line Items] | |||
Extended product warranty term | 1 year | ||
Maximum | |||
Disaggregation of Revenue [Line Items] | |||
Extended product warranty term | 5 years |
Acquisitions (Details)
Acquisitions (Details) $ in Millions, $ in Billions | Jun. 23, 2017USD ($) | May 20, 2016CAD ($) | May 20, 2016USD ($) | Feb. 01, 2019USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | Jan. 29, 2016USD ($) |
Allocation: | |||||||
Goodwill | $ 303 | $ 1,307 | $ 1,082 | $ 154 | |||
Maintenance Supply Headquarters | |||||||
Purchase price: | |||||||
Total cash paid | $ 513 | ||||||
Allocation: | |||||||
Cash acquired | 4 | ||||||
Merchandise inventory | 68 | ||||||
Other current assets | 36 | ||||||
Property | 12 | ||||||
Goodwill | 160 | ||||||
Other assets | 260 | ||||||
Accounts payable | (18) | ||||||
Other current liabilities | (9) | ||||||
Net assets acquired | $ 513 | ||||||
RONA inc | |||||||
Purchase price: | |||||||
Cash paid to common shareholders | $ 1,999 | ||||||
Cash paid to debt holders | 368 | ||||||
Total cash paid | $ 3.1 | 2,367 | |||||
Allocation: | |||||||
Cash acquired | 83 | ||||||
Accounts receivable | 260 | ||||||
Merchandise inventory | 814 | ||||||
Property | 897 | ||||||
Goodwill | 971 | ||||||
Other assets | 437 | ||||||
Other current liabilities | (619) | ||||||
Long-term liabilities | (367) | ||||||
Noncontrolling interest | (109) | ||||||
Net assets acquired | $ 2,367 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) $ / shares in Units, $ in Millions, $ in Millions | Jun. 23, 2017USD ($) | May 20, 2016CAD ($)$ / shares | May 20, 2016USD ($) | Feb. 01, 2019USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | May 20, 2016USD ($) | Jan. 29, 2016USD ($) |
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 303 | $ 1,307 | $ 1,082 | $ 154 | ||||
Maintenance Supply Headquarters | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration | $ 513 | |||||||
Intangible assets acquired | 259 | |||||||
Goodwill expected to be tax deductible | 160 | |||||||
Goodwill | 160 | |||||||
Maintenance Supply Headquarters | Trademarks | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 34 | |||||||
Weighted average useful life | 15 years | |||||||
Maintenance Supply Headquarters | Customer Lists | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 225 | |||||||
Weighted average useful life | 20 years | |||||||
RONA inc | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration | $ 3,100 | $ 2,367 | ||||||
Intangible assets acquired | $ 310 | |||||||
Goodwill expected to be tax deductible | 107 | |||||||
Goodwill | 971 | |||||||
RONA inc | Unsecured Debentures | ||||||||
Business Acquisition [Line Items] | ||||||||
Current liabilities assumed | $ 118 | 91 | ||||||
RONA inc | Trademarks | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | 204 | |||||||
Weighted average useful life | 15 years | 15 years | ||||||
RONA inc | Dealer Relationships | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 106 | |||||||
Weighted average useful life | 20 years | 20 years | ||||||
RONA inc | Common Class A | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition, share price | $ / shares | $ 24 |
Acquisitions (Details Textual 1
Acquisitions (Details Textual 1) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Feb. 03, 2017 | Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | May 20, 2016 | |
Noncontrolling Interest [Line Items] | |||||
Premium paid to acquire noncontrolling interest | $ 0 | $ 0 | $ 18 | ||
RONA inc | RONA inc | |||||
Noncontrolling Interest [Line Items] | |||||
Payments to acquire remaining noncontrolling interest | $ 127 | ||||
RONA inc | Noncontrolling Interest | RONA inc | |||||
Noncontrolling Interest [Line Items] | |||||
Preferred shares outstanding (in shares) | 6.9 | ||||
Noncontrolling interest, amount represented by preferred stock | $ 109 | ||||
Premium paid to acquire noncontrolling interest | $ 18 |
Investment in Australian Join_2
Investment in Australian Joint Venture (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 28, 2016 | Jan. 29, 2016 | |
Schedule of Equity Method Investments [Line Items] | ||
Other comprehensive loss, foreign currency translation reclassification adjustment from AOCI, realized upon loss of significant influence | $ 208 | |
Hydrox Holdings Pty Ltd. | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment impairment losses | $ 530 |
Investment in Australian Join_3
Investment in Australian Joint Venture (Details 1) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Aug. 04, 2017 | Oct. 28, 2016 | Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Schedule of Investments [Line Items] | |||||
Proceeds from sale/maturity of investments | $ 1,393 | $ 1,114 | $ 1,254 | ||
Hydrox Holdings Pty Ltd. | |||||
Schedule of Investments [Line Items] | |||||
Cost method investments impairment loss | $ 290 | ||||
Proceeds from sale/maturity of investments | $ 199 | ||||
Cost method investments, realized gains | $ 96 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring - Estimate of Fair Value - USD ($) $ in Millions | Feb. 01, 2019 | Feb. 02, 2018 |
Short-term Investments | ||
Available-for-sale Securities | ||
Fair value | $ 218 | $ 102 |
Short-term Investments | Money market funds | Level 1 | ||
Available-for-sale Securities | ||
Fair value | 207 | 86 |
Short-term Investments | Agency securities | Level 2 | ||
Available-for-sale Securities | ||
Fair value | 10 | 0 |
Short-term Investments | Corporate debt securities | Level 2 | ||
Available-for-sale Securities | ||
Corporate debt securities | 1 | 0 |
Short-term Investments | Certificates of deposit | Level 1 | ||
Available-for-sale Securities | ||
Fair value | 0 | 16 |
Long-term Investments | ||
Available-for-sale Securities | ||
Fair value | 256 | 408 |
Long-term Investments | Agency securities | Level 2 | ||
Available-for-sale Securities | ||
Fair value | 65 | 0 |
Long-term Investments | Corporate debt securities | Level 2 | ||
Available-for-sale Securities | ||
Corporate debt securities | 191 | 0 |
Long-term Investments | Certificates of deposit | Level 1 | ||
Available-for-sale Securities | ||
Fair value | 0 | 1 |
Long-term Investments | Municipal floating rate obligations | Level 2 | ||
Available-for-sale Securities | ||
Fair value | $ 0 | $ 407 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details 1) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||
Feb. 01, 2019USD ($) | Nov. 02, 2018USD ($)storelocation | Aug. 03, 2018USD ($) | Oct. 28, 2016USD ($) | Feb. 01, 2019USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | Oct. 31, 2018storelocation | |
Fair Value Disclosures | ||||||||
Impairment charges | $ 625 | $ 280 | $ 230 | $ 1,135 | ||||
Assets-held-for-sale: | ||||||||
Goodwill, Impairment Losses | (952) | $ (46) | (952) | $ 0 | $ 0 | |||
Fair Value, Measurements, Nonrecurring | ||||||||
Assets-held-for-sale: | ||||||||
Impairment Losses | (1,505) | |||||||
Fair Value, Measurements, Nonrecurring | Operating Locations | ||||||||
Assets-held-for-use: | ||||||||
Impairment Losses | (331) | |||||||
Fair Value, Measurements, Nonrecurring | Estimate of Fair Value | ||||||||
Assets-held-for-sale: | ||||||||
Mexico operating locations, Fair Value Measurements | 79 | 79 | ||||||
Goodwill, Fair Value Measurements | 2,851 | 2,851 | ||||||
Goodwill, Impairment Losses | (952) | |||||||
Fair Value, Measurements, Nonrecurring | Estimate of Fair Value | Level 3 | ||||||||
Fair Value Disclosures | ||||||||
Fair Value Measurements | 3,403 | 3,403 | ||||||
Assets-held-for-sale: | ||||||||
Fair Value Measurements | 3,403 | 3,403 | ||||||
Fair Value, Measurements, Nonrecurring | Estimate of Fair Value | Level 3 | Operating Locations | ||||||||
Assets-held-for-use: | ||||||||
Fair Value Measurements | 473 | 473 | ||||||
Orchard Supply Hardware | Fair Value, Measurements, Nonrecurring | Estimate of Fair Value | Level 3 | ||||||||
Fair Value Disclosures | ||||||||
Fair Value Measurements | 284 | |||||||
Assets-held-for-sale: | ||||||||
Fair Value Measurements | 284 | |||||||
Location Closures | Fair Value, Measurements, Nonrecurring | Estimate of Fair Value | Level 3 | ||||||||
Fair Value Disclosures | ||||||||
Fair Value Measurements | 81 | |||||||
Assets-held-for-sale: | ||||||||
Fair Value Measurements | 81 | |||||||
U.S. and Canada Operating Locations And Exit Of Non-Core Activities | Fair Value, Measurements, Nonrecurring | ||||||||
Assets-held-for-sale: | ||||||||
Impairment Losses | $ (99) | |||||||
Mexico Operation Locations and Corporate Facility | ||||||||
Fair Value Disclosures | ||||||||
Fair Value Measurements | 79 | 79 | ||||||
Number of locations evaluated for recoverability | location | 13 | |||||||
Assets-held-for-sale: | ||||||||
Mexico operating locations, Impairment Losses | (222) | (222) | ||||||
Fair Value Measurements | 79 | 79 | ||||||
Mexico Operation Locations and Corporate Facility | Fair Value, Measurements, Nonrecurring | ||||||||
Assets-held-for-sale: | ||||||||
Impairment Losses | $ (22) | |||||||
Mexico Operation Locations and Corporate Facility | Fair Value, Measurements, Nonrecurring | Estimate of Fair Value | Level 3 | ||||||||
Fair Value Disclosures | ||||||||
Fair Value Measurements | 107 | |||||||
Assets-held-for-sale: | ||||||||
Fair Value Measurements | 107 | |||||||
Long-lived asset impairments | ||||||||
Fair Value Disclosures | ||||||||
Impairment charges | 222 | 121 | 206 | $ 549 | ||||
Orchard Supply Hardware | ||||||||
Fair Value Disclosures | ||||||||
Impairment charges | 208 | 123 | 230 | |||||
Orchard Supply Hardware | Long-lived asset impairments | ||||||||
Fair Value Disclosures | ||||||||
Impairment charges | $ 206 | |||||||
Strategic Reassessment Closures | ||||||||
Fair Value Disclosures | ||||||||
Impairment charges | $ 150 | $ 121 | ||||||
Expected number of stores closed in the U.S. | store | 20 | 20 | ||||||
Expected number of locations closed in Canada | 31 | 31 | ||||||
Expected number of stores closed in Canada | store | 27 | 27 | ||||||
Strategic Reassessment Closures | Long-lived asset impairments | ||||||||
Fair Value Disclosures | ||||||||
Impairment charges | $ 90 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details 2) - USD ($) $ in Millions | Feb. 01, 2019 | Feb. 02, 2018 |
Financial Instruments | ||
Long-term debt carrying value (excluding capitalized lease obligations) | $ 14,727 | $ 14,967 |
Unsecured notes | ||
Financial Instruments | ||
Long-term debt carrying value (excluding capitalized lease obligations) | 14,721 | 14,961 |
Mortgage notes | ||
Financial Instruments | ||
Long-term debt carrying value (excluding capitalized lease obligations) | 6 | 6 |
Estimate of Fair Value | ||
Financial Instruments | ||
Long-term debt fair value (excluding capitalized lease obligations) | 14,479 | 15,615 |
Estimate of Fair Value | Unsecured notes | Level 1 | ||
Financial Instruments | ||
Long-term debt fair value (excluding capitalized lease obligations) | 14,473 | 15,608 |
Estimate of Fair Value | Mortgage notes | Level 2 | ||
Financial Instruments | ||
Long-term debt fair value (excluding capitalized lease obligations) | $ 6 | $ 7 |
Property and Accumulated Depr_3
Property and Accumulated Depreciation (Details) | 12 Months Ended |
Feb. 01, 2019 | |
Buildings and building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated depreciable lives, in years | 5 years |
Buildings and building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated depreciable lives, in years | 40 years |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated depreciable lives, in years | 2 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated depreciable lives, in years | 15 years |
Property and Accumulated Depr_4
Property and Accumulated Depreciation (Details 1) - USD ($) $ in Millions | Feb. 01, 2019 | Feb. 02, 2018 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 35,863 | $ 36,940 |
Accumulated depreciation | (17,431) | (17,219) |
Property, less accumulated depreciation | 18,432 | 19,721 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 7,196 | 7,414 |
Buildings and building improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 18,052 | 18,521 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 10,090 | 10,475 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 525 | $ 530 |
Property and Accumulated Depr_5
Property and Accumulated Depreciation (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Capital Leases: | |||
Assets under capital lease, cost | $ 665 | $ 724 | |
Assets under capital lease, accumulated depreciation | 244 | 273 | |
Depreciation expense | |||
Depreciation expense | $ 1,400 | $ 1,400 | $ 1,500 |
Exit Activities (Details)
Exit Activities (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Feb. 01, 2019USD ($) | Nov. 02, 2018USD ($)store | Aug. 03, 2018USD ($) | Feb. 01, 2019USD ($) | Oct. 31, 2018storelocation | Aug. 17, 2018store | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | $ 625 | $ 280 | $ 230 | $ 1,135 | ||
Long-lived asset impairments | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 222 | 121 | 206 | 549 | ||
Accelerated depreciation and amortization | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 50 | 103 | 0 | 153 | ||
Severance costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 26 | 32 | 0 | 58 | ||
Lease obligation costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 298 | 9 | 0 | 307 | ||
Discontinued project write-offs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 0 | 10 | 24 | 34 | ||
Inventory adjustments to net realizable value | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 2 | 5 | 0 | 7 | ||
Orchard Supply Hardware | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Number of stores expected to be closed | store | 99 | |||||
Costs incurred | 208 | 123 | 230 | |||
Orchard Supply Hardware | Long-lived asset impairments | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 206 | |||||
Orchard Supply Hardware | Store Closing and Discontinued Projects | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | $ 24 | |||||
Orchard Supply Hardware | Accelerated depreciation and amortization | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 103 | |||||
Orchard Supply Hardware | Severance costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 11 | |||||
Orchard Supply Hardware | Lease obligation costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 9 | |||||
Strategic Reassessment Closures | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 150 | $ 121 | ||||
Expected number of stores closed in the U.S. | store | 20 | 20 | ||||
Number of locations expected to be closed, Canada | 31 | 31 | ||||
Number of stores expected to be closed, Canada | store | 27 | 27 | ||||
Strategic Reassessment Closures | Long-lived asset impairments | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | $ 90 | |||||
Strategic Reassessment Closures | Accelerated depreciation and amortization | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 50 | |||||
Strategic Reassessment Closures | Severance costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 11 | 21 | ||||
Estimated costs to be incurred | 33 | $ 33 | ||||
Strategic Reassessment Closures | Lease obligation costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 89 | |||||
Strategic Reassessment Closures | Discontinued project write-offs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 10 | |||||
Mexico Retail Operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Mexico operating locations, Impairment Losses | 222 | |||||
Mexico Retail Operations | Long-lived asset impairments | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 22 | |||||
Exit of Non-core Activities | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 32 | 14 | ||||
Exit of Non-core Activities | Long-lived asset impairments | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 9 | |||||
Exit of Non-core Activities | Store Closing and Discontinued Projects | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 27 | |||||
Exit of Non-core Activities | Severance costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 3 | |||||
Exit of Non-core Activities | Inventory adjustments to net realizable value | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | 2 | $ 5 | ||||
Projects Specialists Interiors in US Home Improvement Stores | Severance costs | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Costs incurred | $ 13 |
Exit Activities (Details 1)
Exit Activities (Details 1) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | Feb. 01, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | $ 625 | $ 280 | $ 230 | $ 1,135 |
Long-lived asset impairments | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | 222 | 121 | 206 | 549 |
Lease obligation costs for closed locations | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | 298 | 9 | 0 | 307 |
Accelerated depreciation and amortization | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | 50 | 103 | 0 | 153 |
Severance costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | 26 | 32 | 0 | 58 |
Discontinued project write-offs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | 0 | 10 | 24 | 34 |
Inventory adjustments to net realizable value | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | 2 | 5 | 0 | 7 |
Other closing costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Costs incurred | $ 27 | $ 0 | $ 0 | $ 27 |
Exit Activities Exit Activities
Exit Activities Exit Activities (Details 2) - Lease obligation costs for closed locations $ in Millions | 12 Months Ended |
Feb. 01, 2019USD ($) | |
Restructuring Reserve [Roll Forward] | |
Accrual for exit activities, balance at the beginning of period | $ 60 |
Additions to the accrual - net | 365 |
Cash payments | (86) |
Adjustments | 22 |
Accrual for exit activities, balance at the end of period | $ 361 |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Feb. 01, 2019 | Jan. 31, 2019 | Feb. 02, 2018 | |
Line of Credit Facility [Line Items] | ||||
Amount outstanding under the commercial paper program | $ 722,000,000 | $ 1,100,000,000 | ||
Weighted average interest rate of short-term borrowings | 2.81% | 1.85% | ||
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument term | 364 days | |||
Second Amended and Restated Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Amount outstanding under the credit facility | $ 0 | $ 0 | ||
Second Amended and Restated Credit Agreement | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 1,750,000,000 | $ 1,980,000,000 | ||
Debt instrument term | 5 years | |||
Increase in borrowing capacity | 230,000,000 | |||
Optional increase in borrowing capacity | $ 270,000,000 | |||
364 Day Credit Agreement | Line of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 250,000,000 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Millions | Feb. 01, 2019 | Feb. 02, 2018 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 15,501 | $ 15,858 |
Less current maturities | (1,110) | (294) |
Long-term debt, excluding current maturities | 14,391 | 15,564 |
Mortgage notes due through fiscal 2027 | ||
Debt Instrument [Line Items] | ||
Real properties pledged as collateral | $ 16 | |
Secured debt | Mortgage notes due through fiscal 2027 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 5.26% | |
Total long-term debt | $ 6 | 6 |
Unsecured notes | Notes due through fiscal 2023 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 3.43% | |
Total long-term debt | $ 3,832 | 4,079 |
Unsecured notes | Notes due fiscal 2024-2028 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 3.30% | |
Total long-term debt | $ 4,393 | 4,389 |
Unsecured notes | Notes due fiscal 2029-2033 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 6.50% | |
Total long-term debt | $ 309 | 309 |
Unsecured notes | Notes due fiscal 2034-2038 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 5.96% | |
Total long-term debt | $ 897 | 897 |
Unsecured notes | Notes due fiscal 2039-2043 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 4.96% | |
Total long-term debt | $ 1,411 | 1,410 |
Unsecured notes | Notes due fiscal 2044-2048 | ||
Debt Instrument [Line Items] | ||
Weighted-average interest rate | 4.01% | |
Total long-term debt | $ 3,879 | 3,877 |
Unsecured notes | Capitalized lease obligations due through fiscal 2038 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 774 | $ 891 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) - USD ($) | May 31, 2017 | Apr. 30, 2016 | Feb. 01, 2019 |
2019 Floating Rate Notes Issued in 2016 | |||
Debt Instrument [Line Items] | |||
Unsecured notes, issue date | Apr. 30, 2016 | ||
Unsecured notes, issued | $ 250,000,000 | ||
Unsecured notes, maturity date | Apr. 30, 2019 | ||
Unsecured notes, interest rate | 3.027% | ||
Unamortized discount | $ 1,000,000 | ||
Unsecured notes, description of variable rate basis | three-month LIBOR | ||
Unsecured notes, basis spread on variable rate | 0.24% | ||
2019 Fixed Rate Notes Issued in 2016 | |||
Debt Instrument [Line Items] | |||
Unsecured notes, issue date | Apr. 30, 2016 | ||
Unsecured notes, issued | $ 350,000,000 | ||
Unsecured notes, maturity date | Apr. 30, 2019 | ||
Unsecured notes, interest rate | 1.15% | ||
Unamortized discount | $ 1,000,000 | ||
2026 Fixed Rate Notes Issued in 2016 | |||
Debt Instrument [Line Items] | |||
Unsecured notes, issue date | Apr. 30, 2016 | ||
Unsecured notes, issued | $ 1,350,000,000 | ||
Unsecured notes, maturity date | Apr. 30, 2026 | ||
Unsecured notes, interest rate | 2.50% | ||
Unamortized discount | $ 12,000,000 | ||
2046 Fixed Rate Notes Issued in 2016 | |||
Debt Instrument [Line Items] | |||
Unsecured notes, issue date | Apr. 30, 2016 | ||
Unsecured notes, issued | $ 1,350,000,000 | ||
Unsecured notes, maturity date | Apr. 30, 2046 | ||
Unsecured notes, interest rate | 3.70% | ||
Unamortized discount | $ 19,000,000 | ||
2027 Fixed Rate Notes Issued in 2017 | |||
Debt Instrument [Line Items] | |||
Unsecured notes, issue date | May 31, 2017 | ||
Unsecured notes, issued | $ 1,500,000,000 | ||
Unsecured notes, maturity date | May 31, 2027 | ||
Unsecured notes, interest rate | 3.10% | ||
Unamortized discount | $ 9,000,000 | ||
2047 Fixed Rate Notes Issued in 2017 | |||
Debt Instrument [Line Items] | |||
Unsecured notes, issue date | May 31, 2017 | ||
Unsecured notes, issued | $ 1,500,000,000 | ||
Unsecured notes, maturity date | May 31, 2047 | ||
Unsecured notes, interest rate | 4.05% | ||
Unamortized discount | $ 23,000,000 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Additional Long-Term Debt (Textuals) | |||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2019 | $ 1,100 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2020 | 500 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2021 | 1,000 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2022 | 766 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2023 | 500 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, after five years | 11,000 | ||
Debt instrument, repurchased face amount | $ 1,600 | ||
Loss on extinguishment of debt | $ 0 | $ 464 | $ 0 |
2016 and 2017 Combined Notes | |||
Additional Long-Term Debt (Textuals) | |||
Debt instrument, redemption price under change of control provisions, percentage | 101.00% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||||
May 03, 2019 | Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | Nov. 03, 2017 | Aug. 04, 2017 | May 05, 2017 | Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Share Repurchases | ||||||||||||||
Share repurchases, shares | 31.7 | 39.6 | 47.7 | |||||||||||
Share repurchases, value | $ 3,045 | $ 3,174 | $ 3,577 | |||||||||||
Reduction in retained earnings | $ 2,800 | $ 2,900 | $ 3,300 | |||||||||||
Share Repurchase Program | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, shares | 31.2 | 39.1 | 46.7 | |||||||||||
Share repurchases, value | $ 2,999 | $ 3,133 | $ 3,500 | |||||||||||
Shares withheld from employess | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, shares | 0.5 | 0.5 | 1 | |||||||||||
Share repurchases, value | $ 46 | $ 41 | $ 77 | |||||||||||
First Quarter 2016, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 500 | |||||||||||||
Initial Shares Delivered (in shares) | 6.2 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.6 | |||||||||||||
Total Shares Delivered (in shares) | 6.8 | |||||||||||||
Second Quarter 2016, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 500 | |||||||||||||
Initial Shares Delivered (in shares) | 5.3 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 1 | |||||||||||||
Total Shares Delivered (in shares) | 6.3 | |||||||||||||
Third Quarter 2016, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 250 | |||||||||||||
Initial Shares Delivered (in shares) | 2.8 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.6 | |||||||||||||
Total Shares Delivered (in shares) | 3.4 | |||||||||||||
Fourth Quarter 2016, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 190 | |||||||||||||
Initial Shares Delivered (in shares) | 2.4 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.2 | |||||||||||||
Total Shares Delivered (in shares) | 2.6 | |||||||||||||
First Quarter 2017, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 500 | |||||||||||||
Initial Shares Delivered (in shares) | 5.3 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.8 | |||||||||||||
Total Shares Delivered (in shares) | 6.1 | |||||||||||||
Second Quarter 2017, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 500 | |||||||||||||
Initial Shares Delivered (in shares) | 5.2 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 1.2 | |||||||||||||
Total Shares Delivered (in shares) | 6.4 | |||||||||||||
Third Quarter 2017, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 250 | |||||||||||||
Initial Shares Delivered (in shares) | 2.9 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.3 | |||||||||||||
Total Shares Delivered (in shares) | 3.2 | |||||||||||||
Second Quarter 2018, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 550 | |||||||||||||
Initial Shares Delivered (in shares) | 4.8 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.8 | |||||||||||||
Total Shares Delivered (in shares) | 5.6 | |||||||||||||
Third Quarter 2018, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 310 | |||||||||||||
Initial Shares Delivered (in shares) | 2.5 | |||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.3 | |||||||||||||
Total Shares Delivered (in shares) | 2.8 | |||||||||||||
Fourth Quarter 2018, Share Repurchase Agreement | ||||||||||||||
Share Repurchases | ||||||||||||||
ASR Agreement Amount | $ 270 | |||||||||||||
Initial Shares Delivered (in shares) | 2.6 | |||||||||||||
Fourth Quarter 2018, Share Repurchase Agreement | Subsequent Event | ||||||||||||||
Share Repurchases | ||||||||||||||
Additional Shares Delivered at Settlement (in shares) | 0.3 | |||||||||||||
Total Shares Delivered (in shares) | 2.9 |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) | 12 Months Ended | ||||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | Dec. 12, 2018 | Jan. 26, 2018 | |
Shareholders Equity | |||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 | |||
Preferred stock, shares issued (in shares) | 0 | 0 | |||
Common stock, shares authorized | 5,600,000,000 | 5,600,000,000 | |||
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 | |||
Share Repurchases | |||||
Share repurchases, shares | 31,700,000 | 39,600,000 | 47,700,000 | ||
Share repurchases, value | $ 3,045,000,000 | $ 3,174,000,000 | $ 3,577,000,000 | ||
Share Repurchase Program | |||||
Share Repurchases | |||||
Remaining share repurchases authorization, value | $ 13,900,000,000 | ||||
Share repurchases, shares | 31,200,000 | 39,100,000 | 46,700,000 | ||
Share repurchases, value | $ 2,999,000,000 | $ 3,133,000,000 | $ 3,500,000,000 | ||
January 26, 2018 Share Repurchase Authorization | |||||
Share Repurchases | |||||
Share repurchases authorized, value | $ 5,000,000,000 | ||||
December 12, 2018 Share Repurchase Authorization | |||||
Share Repurchases | |||||
Share repurchases authorized, value | $ 10,000,000,000 | ||||
Accelerated Share Repurchase Agreement Purchases | |||||
Share Repurchases | |||||
Share repurchases, shares | 11,000,000 | ||||
Share repurchases, value | $ 1,100,000,000 | ||||
Open Market Purchases | |||||
Share Repurchases | |||||
Share repurchases, shares | 20,200,000 | ||||
Share repurchases, value | $ 1,900,000,000 |
Accounting for Share-Based Pa_3
Accounting for Share-Based Payments (Details) - Employee Stock Option - $ / shares | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Weighted-average assumptions used: | |||
Expected volatility | 23.30% | 23.60% | 24.00% |
Dividend yield | 1.71% | 1.68% | 1.66% |
Risk-free interest rate | 2.71% | 2.14% | 1.42% |
Expected term, in years | 6 years 6 months 29 days | 6 years 5 months 5 days | 6 years 5 months 9 days |
Weighted-average grant-date fair value (in dollars per share) | $ 21.12 | $ 18.30 | $ 15 |
Accounting for Share-Based Pa_4
Accounting for Share-Based Payments (Details 1) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Feb. 01, 2019USD ($)$ / sharesshares | |
Shares | |
Outstanding, beginning balance, shares (in shares) | shares | 2,815 |
Stock options granted (in shares) | shares | 1,021 |
Stock options canceled, forfeited, or expired (in shares) | shares | (385) |
Stock options exercised (in shares) | shares | (760) |
Outstanding, ending balance, shares (in shares) | shares | 2,691 |
Stock options vested and expected to vest, shares (in shares) | shares | 2,610 |
Stock options exercisable (in shares) | shares | 1,719 |
Weighted-Average Exercise Price Per Share | |
Outstanding, beginning balance, weighted-average exercise price per share (in dollars per share) | $ / shares | $ 60.84 |
Stock options granted, weighted-average exercise price per share (in dollars per share) | $ / shares | 90.75 |
Stock options canceled, forfeited, or expired, weighted-average exercise price per share (in dollars per share) | $ / shares | 79.63 |
Stock options exercised, weighted-average exercise price per share (in dollars per share) | $ / shares | 55.95 |
Outstanding, ending balance, weighted-average exercise price per share (in dollars per share) | $ / shares | 70.87 |
Stock options vested and expected to vest, weighted-average exercise price per share (in dollars per share) | $ / shares | 70.18 |
Stock options exercisable, weighted-average exercise price per share (in dollars per share) | $ / shares | $ 60.49 |
Options, Additional Disclosures | |
Outstanding, weighted-average remaining term | 7 years 1 month 6 days |
Outstanding, ending balance, aggregate intrinsic value | $ | $ 72,613 |
Stock options vested and expected to vest, weighted-average remaining term | 7 years 15 days |
Stock options vested and expected to vest, aggregate intrinsic value | $ | $ 72,067 |
Stock options exercisable, weighted-average remaining term | 6 years 11 days |
Stock options exercisable, aggregate intrinsic value | $ | $ 62,943 |
Accounting for Share-Based Pa_5
Accounting for Share-Based Payments (Details 2) - $ / shares shares in Thousands | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Restricted Stock Awards | |||
Number of Shares or Units | |||
Nonvested, beginning balance, shares (in shares) | 1,896 | ||
Granted, shares (in shares) | 1,021 | ||
Vested, shares (in shares) | (772) | ||
Canceled or forfeited, shares (in shares) | (355) | ||
Nonvested, ending balance, shares (in shares) | 1,790 | 1,896 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested, beginning balance, weighted-average grant-date fair value per share (in dollars per share) | $ 73.21 | ||
Granted, weighted-average grant-date fair value per share (in dollars per share) | 86.99 | $ 82.41 | $ 71.35 |
Vested, weighted-average grant-date fair value per share (in dollars per share) | 70.93 | ||
Cancelled or forfeited, weighted-average grant-date fair value per share (in dollars per share) | 77.73 | ||
Nonvested, ending balance, weighted-average grant-date fair value per share (in dollars per share) | $ 81.16 | $ 73.21 | |
Performance Share Units | |||
Number of Shares or Units | |||
Nonvested, beginning balance, shares (in shares) | 698 | ||
Granted, shares (in shares) | 320 | ||
Vested, shares (in shares) | (144) | ||
Canceled or forfeited, shares (in shares) | (261) | ||
Nonvested, ending balance, shares (in shares) | 613 | 698 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested, beginning balance, weighted-average grant-date fair value per share (in dollars per share) | $ 81.31 | ||
Granted, weighted-average grant-date fair value per share (in dollars per share) | 82.22 | $ 91.50 | 77.58 |
Vested, weighted-average grant-date fair value per share (in dollars per share) | 71.22 | ||
Cancelled or forfeited, weighted-average grant-date fair value per share (in dollars per share) | 82.09 | ||
Nonvested, ending balance, weighted-average grant-date fair value per share (in dollars per share) | $ 83.83 | $ 81.31 | |
Weighted-average assumptions used: | |||
Expected volatility | 22.80% | 20.80% | |
Weighted-average dividend yield | 1.77% | 1.62% | |
Weighted-average risk-free interest rate | 2.36% | 1.46% | |
Weighted-average expected term | 2 years 9 months 22 days | 2 years 9 months 29 days | |
Restricted Stock Units | |||
Number of Shares or Units | |||
Nonvested, beginning balance, shares (in shares) | 277 | ||
Granted, shares (in shares) | 182 | ||
Vested, shares (in shares) | (63) | ||
Canceled or forfeited, shares (in shares) | (67) | ||
Nonvested, ending balance, shares (in shares) | 329 | 277 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested, beginning balance, weighted-average grant-date fair value per share (in dollars per share) | $ 69.21 | ||
Granted, weighted-average grant-date fair value per share (in dollars per share) | 80.32 | $ 75.44 | $ 67.26 |
Vested, weighted-average grant-date fair value per share (in dollars per share) | 66.62 | ||
Cancelled or forfeited, weighted-average grant-date fair value per share (in dollars per share) | 73.65 | ||
Nonvested, ending balance, weighted-average grant-date fair value per share (in dollars per share) | $ 74.95 | $ 69.21 |
Accounting for Share-Based Pa_6
Accounting for Share-Based Payments (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Accounting for Share-Based Payments | |||
Share-based payment expense | $ 74,000 | $ 99,000 | $ 90,000 |
Tax benefit related to share-based payment expense | 15,000 | 31,000 | 29,000 |
Unrecognized share-based payment expense | 113,000 | ||
Unrecognized share-based payment expense to be recognized in 2019 | 59,000 | ||
Unrecognized share-based payment expense to be recognized in 2020 | 42,000 | ||
Unrecognized share-based payment expense to be recognized thereafter | $ 12,000 | ||
Weighted-average recognition period | 1 year 10 months 24 days | ||
Stock Incentive Plans | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for grant under all plans | 199,000,000 | ||
Shares authorized for grant under active plans | 80,000,000 | ||
Remaining shares available for grant under active plans | 32,300,000 | ||
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for grant under active plans | 70,000,000 | ||
Remaining shares available for grant under active plans | 21,000,000 | ||
Accounting for Share-Based Payments | |||
Share-based payment expense | $ 13,000 | $ 13,000 | $ 15,000 |
Purchase price of shares, percentage | 85.00% | ||
Share-based payment expense, percentage | 15.00% | ||
Shares issued | 900,000 | 1,100,000 | 1,300,000 |
Employee Stock Option | |||
Accounting for Share-Based Payments | |||
Requisite service period | 3 years | ||
Total intrinsic value of options exercised | $ 36,000 | $ 77,000 | $ 73,000 |
Employee Stock Option | Minimum | |||
Accounting for Share-Based Payments | |||
Contractual term | 7 years | ||
Employee Stock Option | Maximum | |||
Accounting for Share-Based Payments | |||
Contractual term | 10 years | ||
Restricted Stock Awards | |||
Accounting for Share-Based Payments | |||
Requisite service period | 3 years | ||
Weighted-average grant-date fair value of awards granted in the period (in dollars per share) | $ 86.99 | $ 82.41 | $ 71.35 |
Total fair value of awards vested | $ 85,000 | $ 71,000 | $ 151,000 |
Awards granted (in shares) | 1,021,000 | ||
Deferred Stock Units | |||
Accounting for Share-Based Payments | |||
Weighted-average grant-date fair value of awards granted in the period (in dollars per share) | $ 95.83 | $ 80.22 | $ 80.35 |
Total fair value of awards vested | $ 2,300 | $ 1,800 | $ 1,500 |
Annual award amount | 175 | $ 150 | |
Award amount of additional units granted, value | $ 140 | ||
Awards granted (in shares) | 24,300 | ||
Vested outstanding awards (in shares) | 200,000 | ||
Performance Share Units | |||
Accounting for Share-Based Payments | |||
Requisite service period | 3 years | ||
Weighted-average grant-date fair value of awards granted in the period (in dollars per share) | $ 82.22 | $ 91.50 | $ 77.58 |
Total fair value of awards vested | $ 13,000 | $ 31,000 | $ 24,000 |
Awards granted (in shares) | 320,000 | ||
Number of units that could vest | 1,200,000 | ||
Performance Share Units | Minimum | |||
Accounting for Share-Based Payments | |||
Percentage of awards that could vest at end of vesting period | 0.00% | ||
Performance Share Units | Maximum | |||
Accounting for Share-Based Payments | |||
Percentage of awards that could vest at end of vesting period | 200.00% | ||
Restricted Stock Units | |||
Accounting for Share-Based Payments | |||
Requisite service period | 3 years | ||
Weighted-average grant-date fair value of awards granted in the period (in dollars per share) | $ 80.32 | $ 75.44 | $ 67.26 |
Total fair value of awards vested | $ 7,100 | $ 5,600 | $ 7,700 |
Awards granted (in shares) | 182,000 |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Employee Retirement Plans | |||
Service requirement to receive company match | 6 months | ||
Contribution percentage for employees automatically enrolled in the 401k plan hired prior to November 1, 2012 | 1.00% | ||
Maximum company match | 4.25% | ||
Employee retirement plan expense | $ 164 | $ 174 | $ 180 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Effective Income Tax Rate Reconciliation | |||
Statutory federal income tax rate | 21.00% | 33.70% | 35.00% |
State income taxes, net of federal tax benefit | 4.80% | 2.90% | 3.60% |
Valuation allowance - Australian joint venture | 0.00% | (0.60%) | 2.00% |
Goodwill impairment | 5.50% | 0.00% | 0.00% |
Mexico impairment | 1.50% | 0.00% | 0.00% |
Other, net | (1.00%) | 1.20% | (0.10%) |
Effective tax rate | 31.80% | 37.20% | 40.50% |
Current: | |||
Federal | $ 963 | $ 1,734 | $ 1,824 |
State | 274 | 252 | 275 |
Total current | 1,237 | 1,986 | 2,099 |
Deferred: | |||
Federal | (102) | 60 | 6 |
State | (55) | (4) | 3 |
Total deferred | (157) | 56 | 9 |
Total income tax provision | 1,080 | 2,042 | 2,108 |
Deferred tax assets: | |||
Self-insurance | 252 | 238 | |
Share-based payment expense | 31 | 36 | |
Deferred rent | 58 | 66 | |
Mexico impairment | 74 | 0 | |
Capital loss carryforwards | 223 | 225 | |
Net operating losses | 239 | 213 | |
Other, net | 119 | 124 | |
Total deferred tax assets | 996 | 902 | |
Valuation allowance | (569) | (475) | |
Net deferred tax assets | 427 | 427 | |
Deferred tax liabilities: | |||
Property | (76) | (264) | |
Other, net | (57) | (23) | |
Total deferred tax liabilities | (133) | (287) | |
Net deferred tax asset | 294 | 140 | |
Unrecognized Tax Benefits Reconciliation | |||
Unrecognized tax benefits, beginning of year | 0 | 6 | 3 |
Additions for tax positions of prior years | 10 | 0 | 3 |
Reductions for tax positions of prior years | 0 | (2) | 0 |
Settlements | 0 | (1) | 0 |
Reductions due to a lapse in applicable statute of limitations | 0 | (3) | 0 |
Unrecognized tax benefits, end of year | $ 10 | $ 0 | $ 6 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2018 | Feb. 02, 2018 | Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Income Taxes | |||||
Statutory federal income tax rate | 21.00% | 33.70% | 35.00% | ||
Tax Cuts and Jobs Act, revaluation of deferred tax assets | $ 56 | ||||
Tax Cuts and Jobs Act, one-time transition tax | $ 22 | ||||
Blended tax rate expense (benefit) | $ (58) | ||||
One-time deemed repatriation transition tax | $ 2 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details Textual) - USD ($) | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Valuation Allowance [Line Items] | |||
Deferred tax assets, capital loss carryforwards | $ 223,000,000 | $ 225,000,000 | |
Deferred tax assets, foreign currency increase (decrease) | 26,000,000 | (11,000,000) | $ (33,000,000) |
Deferred tax asset increase due to exiting Mexico operations prior to effective date of Regulation 987 | 18,000,000 | ||
Deferred tax assets, valuation allowance | 569,000,000 | 475,000,000 | |
Unrecognized tax benefits that would impact effective tax rate | 8,000,000 | 5,000,000 | |
Interest on tax uncertainties | 3,000,000 | (3,000,000) | 2,000,000 |
Accrued interest on uncertain tax positions | 3,000,000 | 0 | |
Uncertain tax positions, penalties | 0 | 0 | $ 0 |
Uncertain tax positions, accrued penalties | $ 0 | 0 | |
Earliest Tax Year | Canada Revenue Agency | |||
Valuation Allowance [Line Items] | |||
Years under taxing authority examination | 2014 | ||
Latest Tax Year | Canada Revenue Agency | |||
Valuation Allowance [Line Items] | |||
Years under taxing authority examination | 2015 | ||
Foreign Tax Authority | |||
Valuation Allowance [Line Items] | |||
Cumulative net operating losses | $ 800,000,000 | 720,000,000 | |
Deferred tax assets, valuation allowance | $ 331,000,000 | $ 234,000,000 | |
Foreign Tax Authority | Earliest Tax Year | |||
Valuation Allowance [Line Items] | |||
Range of expiration dates of net operating losses | Dec. 31, 2019 | ||
Years subject to income tax examinations | 2012 | ||
Foreign Tax Authority | Latest Tax Year | |||
Valuation Allowance [Line Items] | |||
Range of expiration dates of net operating losses | Dec. 31, 2038 | ||
Years subject to income tax examinations | 2017 | ||
US state audits | Earliest Tax Year | |||
Valuation Allowance [Line Items] | |||
Years under taxing authority examination | 2013 | ||
US state audits | Latest Tax Year | |||
Valuation Allowance [Line Items] | |||
Years under taxing authority examination | 2017 | ||
Hydrox Holdings Pty Ltd. | |||
Valuation Allowance [Line Items] | |||
Deferred tax assets, capital loss carryforwards | $ 223,000,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Basic earnings per common share: | |||
Net earnings attributable to Lowe's Companies, Inc. | $ 2,314 | $ 3,447 | $ 3,091 |
Less: Net earnings allocable to participating securities | (7) | (11) | (11) |
Less: Premium paid to acquire noncontrolling interest | 0 | 0 | (18) |
Net earnings allocable to common shares, basic | $ 2,307 | $ 3,436 | $ 3,062 |
Weighted-average common shares outstanding (in shares) | 811 | 839 | 880 |
Basic earnings per common share (in dollars per share) | $ 2.84 | $ 4.09 | $ 3.48 |
Diluted earnings per common share: | |||
Net earnings attributable to Lowe's Companies, Inc. | $ 2,314 | $ 3,447 | $ 3,091 |
Less: Net earnings allocable to participating securities | (7) | (11) | (11) |
Less: Premium paid to acquire noncontrolling interest | 0 | 0 | (18) |
Net earnings allocable to common shares, diluted | $ 2,307 | $ 3,436 | $ 3,062 |
Weighted-average common shares outstanding (in shares) | 811 | 839 | 880 |
Dilutive effect of non-participating share-based awards (in shares) | 1 | 1 | 1 |
Weighted-average common shares, as adjusted (in shares) | 812 | 840 | 881 |
Diluted earnings per common share (in dollars per share) | $ 2.84 | $ 4.09 | $ 3.47 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares shares in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Earnings Per Share | |||
Anti-dilutive securities | 0.5 | 0.5 | 1 |
Leases (Details)
Leases (Details) $ in Millions | Feb. 01, 2019USD ($) |
Operating Leases, Future Minimum Payments Due | |
2019 | $ 595 |
2020 | 605 |
2021 | 564 |
2022 | 519 |
2023 | 473 |
Later years | 2,609 |
Total minimum lease payments | 5,365 |
Capitalized Lease Obligations, Future Minimum Payments Due | |
2019 | 133 |
2020 | 87 |
2021 | 90 |
2022 | 87 |
2023 | 86 |
Later years | 783 |
Total minimum lease payments | 1,266 |
Less amount representing interest | (492) |
Present value of minimum lease payments | 774 |
Less current maturities | (65) |
Present value of minimum lease payments, less current maturities | 709 |
Operating and Capitalized Lease Obligations, Total, Future Minimum Payments Due | |
2019 | 728 |
2020 | 692 |
2021 | 654 |
2022 | 606 |
2023 | 559 |
Later years | 3,392 |
Total minimum lease payments | $ 6,631 |
Leases (Details Textual)
Leases (Details Textual) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019USD ($)count | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | |
Leases | |||
Lease term, store facilities and land | 20 years | ||
Renewal options included in lease agreements, minimum | 4 | ||
Renewal options included in lease agreements, maximum | 6 | ||
Duration of lease renewal options | 5 years | ||
Operating leases, rent expense | $ | $ 616 | $ 626 | $ 549 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Feb. 01, 2019USD ($) |
Commitments and Contingencies | |
Non-cancelable commitments | $ 1,000 |
Non-cancelable commitments due 2019 | 564 |
Non-cancelable commitments due 2020 | 352 |
Non-cancelable commitments due 2021 | 86 |
Non-cancelable commitments due 2022 | 20 |
Non-cancelable commitments thereafter | 0 |
Standby and documentary letters of credit outstanding | $ 59 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Consumer Packaged Goods Vendor | |||
Related Party Transactions | |||
Related party purchases | $ 156 | $ 149 | $ 124 |
Health and Welfare Benefit Plans Vendor | |||
Related Party Transactions | |||
Related party purchases | 2 | $ 14 | $ 59 |
Transportation and Business Services Vendor | |||
Related Party Transactions | |||
Related party purchases | $ 91 |
Other Information (Details)
Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Net interest expense | |||
Long-term debt | $ 582 | $ 582 | $ 583 |
Capitalized lease obligations | 58 | 56 | 53 |
Interest income | (28) | (16) | (12) |
Interest capitalized | (3) | (5) | (4) |
Interest on tax uncertainties | 3 | (3) | 2 |
Other | 12 | 19 | 23 |
Interest - net | 624 | 633 | 645 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest, net of amount capitalized | 635 | 654 | 619 |
Cash paid for income taxes, net | 1,316 | 1,673 | 2,217 |
Non-cash investing and financing activities: | |||
Non-cash property acquisitions, including assets acquired under capital lease | 44 | 97 | 86 |
Cash dividends declared but not paid | $ 385 | $ 340 | $ 304 |
Other Information (Details 1)
Other Information (Details 1) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Sales by Product Category | |||
Percentage of total sales | 100.00% | 100.00% | 100.00% |
Net sales | $ 71,309 | $ 68,619 | $ 65,017 |
Lumber & Building Materials | |||
Sales by Product Category | |||
Percentage of total sales | 14.00% | 14.00% | 13.00% |
Net sales | $ 9,968 | $ 9,517 | $ 8,513 |
Appliances | |||
Sales by Product Category | |||
Percentage of total sales | 12.00% | 11.00% | 11.00% |
Net sales | $ 8,391 | $ 7,696 | $ 7,037 |
Seasonal & Outdoor Living | |||
Sales by Product Category | |||
Percentage of total sales | 10.00% | 10.00% | 11.00% |
Net sales | $ 7,352 | $ 7,162 | $ 6,998 |
Tools & Hardware | |||
Sales by Product Category | |||
Percentage of total sales | 10.00% | 10.00% | 10.00% |
Net sales | $ 6,906 | $ 6,723 | $ 6,376 |
Fashion Fixtures | |||
Sales by Product Category | |||
Percentage of total sales | 9.00% | 9.00% | 10.00% |
Net sales | $ 6,351 | $ 6,424 | $ 6,303 |
Rough Plumbing & Electrical | |||
Sales by Product Category | |||
Percentage of total sales | 9.00% | 9.00% | 9.00% |
Net sales | $ 6,327 | $ 6,142 | $ 5,741 |
Lawn & Garden | |||
Sales by Product Category | |||
Percentage of total sales | 8.00% | 8.00% | 8.00% |
Net sales | $ 5,433 | $ 5,222 | $ 5,091 |
Millwork | |||
Sales by Product Category | |||
Percentage of total sales | 8.00% | 8.00% | 8.00% |
Net sales | $ 5,381 | $ 5,308 | $ 5,238 |
Paint | |||
Sales by Product Category | |||
Percentage of total sales | 7.00% | 8.00% | 8.00% |
Net sales | $ 5,263 | $ 5,297 | $ 5,171 |
Flooring | |||
Sales by Product Category | |||
Percentage of total sales | 6.00% | 6.00% | 6.00% |
Net sales | $ 4,282 | $ 4,363 | $ 4,227 |
Kitchens | |||
Sales by Product Category | |||
Percentage of total sales | 5.00% | 5.00% | 5.00% |
Net sales | $ 3,700 | $ 3,642 | $ 3,532 |
Other | |||
Sales by Product Category | |||
Percentage of total sales | 2.00% | 2.00% | 1.00% |
Net sales | $ 1,955 | $ 1,123 | $ 790 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Feb. 29, 2016USD ($) | Jul. 29, 2016USD ($) | Feb. 01, 2019USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | Feb. 29, 2016CAD ($) | |
Derivatives, Fair Value [Line Items] | ||||||
Purchases of derivative instrument, investing activities | $ 0 | $ 0 | $ 103 | |||
Proceeds from derivative instrument, investing activities | $ 0 | $ 0 | 179 | |||
Foreign Exchange Option | Not Designated as Hedging Instrument | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Derivative asset, notional amount | $ 3,200,000,000 | |||||
Purchases of derivative instrument, investing activities | $ 103 | |||||
Proceeds from derivative instrument, investing activities | $ 179 | |||||
Gain on derivative, net | $ 76 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 | |
Reserve for loss on obsolete inventory | |||
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of period | $ 77 | $ 59 | $ 46 |
Charges to costs and expenses | 1 | 18 | 13 |
Deductions | 0 | 0 | 0 |
Balance at end of period | 78 | 77 | 59 |
Reserve for inventory shrinkage | |||
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of period | 212 | 189 | 171 |
Charges to costs and expenses | 478 | 456 | 397 |
Deductions | (468) | (433) | (379) |
Balance at end of period | 222 | 212 | 189 |
Reserve for sales returns | |||
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of period | 71 | 71 | 66 |
Charges to costs and expenses | 123 | 0 | 5 |
Deductions | 0 | 0 | 0 |
Balance at end of period | 194 | 71 | 71 |
Deferred tax valuation allowance | |||
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of period | 475 | 578 | 447 |
Charges to costs and expenses | 94 | 0 | 131 |
Deductions | 0 | (103) | 0 |
Balance at end of period | 569 | 475 | 578 |
Self-insurance liabilities | |||
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of period | 890 | 831 | 883 |
Charges to costs and expenses | 1,530 | 1,547 | 1,418 |
Deductions | (1,467) | (1,488) | (1,470) |
Balance at end of period | 953 | 890 | 831 |
Reserve for exit activities | |||
Movement in Valuation Allowances and Reserves | |||
Balance at beginning of period | 60 | 66 | 67 |
Charges to costs and expenses | 384 | 19 | 47 |
Deductions | (83) | (25) | (48) |
Balance at end of period | $ 361 | $ 60 | $ 66 |