Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Nov. 01, 2019 | Nov. 29, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Nov. 1, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-7898 | |
Entity Registrant Name | LOWES COMPANIES INC | |
Entity Incorporation, State or Country Code | NC | |
Entity Tax Identification Number | 56-0578072 | |
Entity Address, Address Line One | 1000 Lowe’s Blvd. | |
Entity Address, City or Town | Mooresville, | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 28117 | |
City Area Code | (704) | |
Local Phone Number | 758-1000 | |
Title of each class | Common Stock, par value $0.50 per share | |
Trading Symbol | LOW | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity small business | false | |
Entity emerging growth company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 766,475,430 | |
Entity Central Index Key | 0000060667 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --01-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) shares in Millions, $ in Millions | Nov. 01, 2019 | Feb. 01, 2019 | Nov. 02, 2018 |
Current assets: | |||
Cash and cash equivalents | $ 794 | $ 511 | $ 1,668 |
Short-term investments | 127 | 218 | 208 |
Merchandise inventory - net | 13,716 | 12,561 | 12,365 |
Other current assets | 1,025 | 938 | 897 |
Total current assets | 15,662 | 14,228 | 15,138 |
Property, less accumulated depreciation | 18,371 | 18,432 | 18,923 |
Operating lease right-of-use assets | 3,873 | ||
Long-term investments | 363 | 256 | 290 |
Deferred income taxes - net | 479 | 294 | 285 |
Goodwill | 303 | 303 | 1,272 |
Other assets | 713 | 995 | 805 |
Total assets | 39,764 | 34,508 | 36,713 |
Current liabilities: | |||
Short-term borrowings | 637 | 722 | 0 |
Current maturities of long-term debt | 574 | 1,110 | 1,117 |
Current operating lease liabilities | 499 | ||
Accounts payable | 8,822 | 8,279 | 9,283 |
Accrued compensation and employee benefits | 779 | 662 | 806 |
Deferred revenue | 1,222 | 1,299 | 1,356 |
Other current liabilities | 2,530 | 2,425 | 2,507 |
Total current liabilities | 15,063 | 14,497 | 15,069 |
Long-term debt, excluding current maturities | 16,635 | 14,391 | 14,460 |
Noncurrent operating lease liabilities | 3,942 | ||
Deferred revenue - extended protection plans | 875 | 827 | 827 |
Other liabilities | 791 | 1,149 | 963 |
Total liabilities | 37,306 | 30,864 | 31,319 |
Shareholders' equity: | |||
Preferred stock - $5 par value, none issued | $ 0 | $ 0 | 0 |
Common Stock, Shares, Issued | 768 | 801 | |
Common stock - $0.50 par value; Shares issued and outstanding, 768 at November 1, 2019, 806 at November 2, 2018, and 801 at February 1, 2019 | $ 384 | $ 401 | 403 |
Capital in excess of par value | 0 | 0 | 0 |
Retained earnings | 2,238 | 3,452 | 5,156 |
Accumulated other comprehensive loss | (164) | (209) | (165) |
Total shareholders' equity | 2,458 | 3,644 | 5,394 |
Total liabilities and shareholders' equity | $ 39,764 | $ 34,508 | $ 36,713 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Nov. 01, 2019 | Feb. 01, 2019 | Nov. 02, 2018 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 | $ 5 |
Preferred stock, shares issued | 0 | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 | $ 0.50 |
Common stock, shares issued | 768,000,000 | 801,000,000 | |
Common stock, shares outstanding | 768,000,000 | 801,000,000 | 806,000,000 |
Consolidated Statements of Curr
Consolidated Statements of Current and Retained Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Current Earnings | ||||
Net sales | $ 17,388 | $ 17,415 | $ 56,121 | $ 55,662 |
Cost of sales | 11,748 | 12,038 | 38,159 | 37,653 |
Gross margin | 5,640 | 5,377 | 17,962 | 18,009 |
Expenses: | ||||
Selling, general and administrative | 3,772 | 3,997 | 11,682 | 12,315 |
Depreciation and amortization | 310 | 423 | 924 | 1,108 |
Operating income | 1,558 | 957 | 5,356 | 4,586 |
Interest - net | 177 | 153 | 508 | 467 |
Pre-tax earnings | 1,381 | 804 | 4,848 | 4,119 |
Income tax provision | 332 | 175 | 1,077 | 981 |
Net earnings | $ 1,049 | $ 629 | $ 3,771 | $ 3,138 |
Weighted-average common shares outstanding - basic (in shares) | 769 | 806 | 782 | 815 |
Basic earnings per common share (in dollars per share) | $ 1.36 | $ 0.78 | $ 4.81 | $ 3.84 |
Weighted-average common shares outstanding - diluted (in shares) | 770 | 807 | 783 | 816 |
Diluted earnings per common share (in dollars per share) | $ 1.36 | $ 0.78 | $ 4.80 | $ 3.83 |
Cash dividends per share (in dollars per share) | $ 0.55 | $ 0.48 | $ 1.58 | $ 1.37 |
Retained Earnings | ||||
Balance at beginning of period | $ 2,439 | $ 5,517 | $ 3,452 | $ 5,425 |
Net earnings | 1,049 | 629 | 3,771 | 3,138 |
Cash dividends declared | (423) | (387) | (1,233) | (1,115) |
Share repurchases | (827) | (603) | (3,489) | (2,325) |
Balance at end of period | $ 2,238 | $ 5,156 | $ 2,238 | $ 5,156 |
Consolidated Statements of Cu_2
Consolidated Statements of Current and Retained Earnings (Percents) (Unaudited) | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Current Earnings | ||||
Net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Cost of sales | 67.56% | 69.12% | 67.99% | 67.64% |
Gross margin | 32.44% | 30.88% | 32.01% | 32.36% |
Expenses: | ||||
Selling, general and administrative | 21.69% | 22.95% | 20.82% | 22.13% |
Depreciation and amortization | 1.79% | 2.43% | 1.65% | 1.99% |
Operating income | 8.96% | 5.50% | 9.54% | 8.24% |
Interest - net | 1.02% | 0.88% | 0.90% | 0.84% |
Pre-tax earnings | 7.94% | 4.62% | 8.64% | 7.40% |
Income tax provision | 1.90% | 1.01% | 1.92% | 1.76% |
Net earnings | 6.04% | 3.61% | 6.72% | 5.64% |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Comprehensive Income | ||||
Net earnings | $ 1,049 | $ 629 | $ 3,771 | $ 3,138 |
Foreign currency translation adjustments - net of tax | 24 | (21) | 60 | (176) |
Other | (1) | (1) | (15) | (1) |
Other comprehensive income/(loss) | 23 | (22) | 45 | (177) |
Comprehensive income | $ 1,072 | $ 607 | $ 3,816 | $ 2,961 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Percents) (Unaudited) | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Comprehensive Income | ||||
Net earnings | 6.04% | 3.61% | 6.72% | 5.64% |
Foreign currency translation adjustments - net of tax | 0.13% | (0.13%) | 0.11% | (0.32%) |
Other | 0.00% | 0.00% | (0.03%) | 0.00% |
Other comprehensive income/(loss) | 0.13% | (0.13%) | 0.08% | (0.32%) |
Comprehensive income | 6.17% | 3.48% | 6.80% | 5.32% |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of accounting change | $ 33 | $ 33 | |||
Balance (in shares) at Feb. 02, 2018 | 830 | ||||
Balance at Feb. 02, 2018 | 5,873 | $ 415 | $ 22 | 5,425 | $ 11 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 3,138 | 3,138 | |||
Other comprehensive income | (176) | (176) | |||
Cash dividends declared | (1,115) | (1,115) | |||
Share-based payment expense | $ 77 | 77 | |||
Repurchase of common stock (in shares) | (26.2) | (26) | |||
Repurchase of common stock | $ (2,508) | $ (13) | (170) | (2,325) | |
Issuance of common stock under share-based payment plans (in shares) | 2 | ||||
Issuance of common stock under share-based payment plans | $ 72 | $ 1 | 71 | ||
Balance (in shares) at Nov. 02, 2018 | 806 | 806 | |||
Balance at Nov. 02, 2018 | $ 5,394 | $ 403 | 0 | 5,156 | (165) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of accounting change | 0 | ||||
Balance (in shares) at Aug. 03, 2018 | 811 | ||||
Balance at Aug. 03, 2018 | 5,781 | $ 406 | 0 | 5,517 | (142) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 629 | 629 | |||
Other comprehensive income | (23) | (23) | |||
Cash dividends declared | (387) | (387) | |||
Share-based payment expense | $ 15 | 15 | |||
Repurchase of common stock (in shares) | (5.9) | (6) | |||
Repurchase of common stock | $ (644) | $ (3) | (38) | (603) | |
Issuance of common stock under share-based payment plans (in shares) | 1 | ||||
Issuance of common stock under share-based payment plans | $ 23 | $ 0 | 23 | ||
Balance (in shares) at Nov. 02, 2018 | 806 | 806 | |||
Balance at Nov. 02, 2018 | $ 5,394 | $ 403 | 0 | 5,156 | (165) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of accounting change | $ (263) | (263) | |||
Balance (in shares) at Feb. 01, 2019 | 801 | 801 | |||
Balance at Feb. 01, 2019 | $ 3,644 | $ 401 | 0 | 3,452 | (209) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 3,771 | 3,771 | |||
Other comprehensive income | 45 | 45 | |||
Cash dividends declared | (1,233) | (1,233) | |||
Share-based payment expense | $ 72 | 72 | |||
Repurchase of common stock (in shares) | (35.6) | (36) | |||
Repurchase of common stock | $ (3,655) | $ (18) | (148) | (3,489) | |
Issuance of common stock under share-based payment plans (in shares) | 3 | ||||
Issuance of common stock under share-based payment plans | $ 77 | $ 1 | 76 | ||
Balance (in shares) at Nov. 01, 2019 | 768 | 768 | |||
Balance at Nov. 01, 2019 | $ 2,458 | $ 384 | 0 | 2,238 | (164) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Cumulative effect of accounting change | 0 | ||||
Balance (in shares) at Aug. 02, 2019 | 776 | ||||
Balance at Aug. 02, 2019 | 2,640 | $ 388 | 0 | 2,439 | (187) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 1,049 | 1,049 | |||
Other comprehensive income | 23 | 23 | |||
Cash dividends declared | (423) | (423) | |||
Share-based payment expense | $ 20 | 20 | |||
Repurchase of common stock (in shares) | (7.9) | (8) | |||
Repurchase of common stock | $ (858) | $ (4) | (27) | (827) | |
Issuance of common stock under share-based payment plans (in shares) | 0 | ||||
Issuance of common stock under share-based payment plans | $ 7 | $ 0 | 7 | ||
Balance (in shares) at Nov. 01, 2019 | 768 | 768 | |||
Balance at Nov. 01, 2019 | $ 2,458 | $ 384 | $ 0 | $ 2,238 | $ (164) |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Cash dividends per share (in dollars per share) | $ 0.55 | $ 0.48 | $ 1.58 | $ 1.37 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Nov. 01, 2019 | Nov. 02, 2018 | |
Cash flows from operating activities: | ||
Net earnings | $ 3,771 | $ 3,138 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 1,029 | 1,206 |
Noncash lease expense | 341 | 0 |
Deferred income taxes | (88) | (139) |
Loss on property and other assets - net | 93 | 400 |
Loss on cost method and equity method investments | 12 | 6 |
Share-based payment expense | 75 | 79 |
Changes in operating assets and liabilities: | ||
Merchandise inventory - net | (1,129) | (1,030) |
Other operating assets | (108) | (94) |
Accounts payable | 523 | 2,708 |
Other operating liabilities | (408) | 524 |
Net cash provided by operating activities | 4,111 | 6,798 |
Cash flows from investing activities: | ||
Purchases of investments | (563) | (1,298) |
Proceeds from sale/maturity of investments | 556 | 1,309 |
Capital expenditures | (927) | (846) |
Proceeds from sale of property and other long-term assets | 71 | 50 |
Other - net | 0 | (3) |
Net cash used in investing activities | (863) | (788) |
Cash flows from financing activities: | ||
Net change in short-term borrowings | (85) | (1,137) |
Net proceeds from issuance of long-term debt | 2,972 | 0 |
Repayment of long-term debt | (1,092) | (288) |
Proceeds from issuance of common stock under share-based payment plans | 78 | 73 |
Cash dividend payments | (1,195) | (1,068) |
Repurchase of common stock | (3,649) | (2,498) |
Other - net | (7) | (3) |
Net cash used in financing activities | (2,978) | (4,921) |
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 1 | (9) |
Net increase in cash and cash equivalents, including cash classified within current assets held for sale | 271 | 1,080 |
Less: Net decrease in cash classified within current assets held for sale | (12) | 0 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect | 283 | 1,080 |
Cash and cash equivalents, beginning of period | 511 | 588 |
Cash and cash equivalents, end of period | $ 794 | $ 1,668 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Nov. 01, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of November 1, 2019 , and November 2, 2018 , the results of operations, comprehensive income, and shareholders’ equity for the three and nine months ended November 1, 2019 , and November 2, 2018 , and cash flows for the nine months ended November 1, 2019 and November 2, 2018 . These interim consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended February 1, 2019 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year. Reclassifications Certain prior period amounts have been reclassified to conform to current classifications. Accounting Pronouncements Recently Adopted Effective February 2, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), and all related amendments, using the optional transition approach and recognized the cumulative impact of adoption in the opening balance of retained earnings. Under ASU 2016-02, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. The Company adopted the standard utilizing the transition election to not restate comparative periods for the impact of adopting the standard and recognizing the cumulative impact of adoption in the opening balance of retained earnings. The Company elected the package of transition expedients available for expired or existing contracts, which allowed the carry-forward of historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the standard resulted in the recording of additional net lease-related assets and lease-related liabilities of approximately $3.6 billion and $3.9 billion , respectively, as of February 2, 2019. The difference between the additional lease assets and lease liabilities, net of the $87 million deferred tax impact, was $263 million and was recorded as an adjustment to retained earnings. This adjustment to retained earnings primarily represents the write-off of right-of-use assets associated with closed locations, net of previously established store closing lease obligations as well as the derecognition of build-to-suit leases. The adoption of this standard by the Company did not have a material impact on its consolidated statements of earnings, comprehensive income or cash flows and will have no impact on the Company’s debt covenant compliance under its current agreements. See Note 3 for additional details of the Company’s leases. Accounting Pronouncements Not Yet Adopted |
Change in Accounting Principle
Change in Accounting Principle | 9 Months Ended |
Nov. 01, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
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 were not impacted by this accounting principle change. The consolidated statements of earnings for the three and nine months ended November 2, 2018 have been adjusted to reflect this change in accounting principle. The impact of the adjustment for the three months ended November 2, 2018 was an increase of $283 million to cost of sales and a corresponding decrease to SG&A expense of $273 million and depreciation and amortization expense of $10 million . The impact of the adjustment for the nine months ended November 2, 2018 was an increase of $862 million to cost of sales and a corresponding decrease to SG&A expense for $832 million and depreciation and amortization expense of $30 million |
Leases
Leases | 9 Months Ended |
Nov. 01, 2019 | |
Leases [Abstract] | |
Leases | Leases - During the first quarter of fiscal 2019, the Company adopted ASU 2016-02, Leases (Topic 842) , which requires leases to be recognized on the balance sheet. Leases with an original term of 12 months or less are not recognized on the Company’s balance sheet, and the lease expense related to those short-term leases is recognized over the lease term. The Company does not account for lease and non-lease (e.g. common area maintenance) components of contracts separately for any underlying asset class. The Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment under finance and operating leases. Lease commencement occurs on the date the Company takes possession or control of the property or equipment. Original terms for our facility-related leases are generally between five and 20 years . These leases generally contain provisions for four to six renewal options of five years each. Original terms for equipment-related leases, primarily material handling equipment and vehicles, are generally between one and seven years . Some of the Company’s leases also include rental escalation clauses and/or termination provisions. Renewal options and termination options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital. If readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, the Company’s estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. 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, which are based on future performance or changes in indices, are excluded from the determination of lease payments and were not significant for any of the periods presented. The Company’s lease agreements do not contain any material restrictions, covenants or any material residual value guarantees. The Company subleases certain properties that are not used in its operations. Sublease income was not significant for any of the periods presented. The table below presents the lease-related assets and liabilities recorded on the balance sheet. Leases (In millions) Classification November 1, 2019 Assets Operating lease assets Operating lease right-of-use assets $ 3,873 Finance lease assets Property, less accumulated depreciation 1 403 Total lease assets 4,276 Liabilities Current Operating Current operating lease liabilities 499 Finance Current maturities of long-term debt 49 Noncurrent Operating Noncurrent operating lease liabilities 3,942 Finance Long-term debt, excluding current maturities 481 Total lease liabilities $ 4,971 1 Finance lease assets are recorded net of accumulated amortization of $27 million as of November 1, 2019 . The table below presents the lease costs for finance and operating leases for the three and nine months ended November 1, 2019 : Lease Cost (In millions) Three Months Ended November 1, 2019 Nine Months Ended November 1, 2019 Finance lease cost Amortization of leased assets $ 11 $ 28 Interest on lease liabilities 7 21 Operating lease cost 1 185 524 Total lease cost $ 203 $ 573 1 Includes short-term leases, variable lease costs, and sublease income, which are immaterial. The future minimum rental payments required under operating and finance lease obligations as of November 1, 2019 having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: Maturity of lease liabilities (In millions) Operating Leases 1 Finance Leases 2 Total 2019 $ 124 $ 15 $ 139 2020 668 78 746 2021 652 77 729 2022 661 80 741 2023 571 75 646 After 2023 3,006 381 3,387 Total lease payments 5,682 706 6,388 Less: interest 3 (1,241 ) (176 ) (1,417 ) Present value of lease liabilities 4 $ 4,441 $ 530 $ 4,971 1 Operating lease payments include $249 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $299 million of minimum lease payments for leases signed but not yet commenced. 2 Finance lease payments include $11 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $233 million of minimum lease payments for leases signed but not yet commenced. 3 Calculated using the lease-specific incremental borrowing rate. 4 Includes the current portion of $499 million for operating leases and $49 million for finance leases. Lease Term and Discount Rate November 1, 2019 Weighted-average remaining lease term (years) Operating leases 10.64 Finance leases 10.00 Weighted-average discount rate Operating leases 4.26 % Finance leases 6.42 % Other Information (In millions) Nine Months Ended November 1, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows used for operating leases $ 629 Operating cash flows used for finance leases 22 Financing cash flows used for finance leases 37 Leased assets obtained in exchange for new finance lease liabilities 156 Leased assets obtained in exchange for new operating lease liabilities 374 Prior Period Disclosures As a result of the adoption of ASC 842, Leases , on February 2, 2019, the Company is required to present future minimum lease payments for operating and finance lease obligations having initial or remaining non-cancelable lease terms in excess of one year. These future minimum lease payments were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under previous lease guidance. Commitments as of February 1, 2019 were as follows: February 1, 2019 Fiscal Year (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 |
Leases | Leases - During the first quarter of fiscal 2019, the Company adopted ASU 2016-02, Leases (Topic 842) , which requires leases to be recognized on the balance sheet. Leases with an original term of 12 months or less are not recognized on the Company’s balance sheet, and the lease expense related to those short-term leases is recognized over the lease term. The Company does not account for lease and non-lease (e.g. common area maintenance) components of contracts separately for any underlying asset class. The Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment under finance and operating leases. Lease commencement occurs on the date the Company takes possession or control of the property or equipment. Original terms for our facility-related leases are generally between five and 20 years . These leases generally contain provisions for four to six renewal options of five years each. Original terms for equipment-related leases, primarily material handling equipment and vehicles, are generally between one and seven years . Some of the Company’s leases also include rental escalation clauses and/or termination provisions. Renewal options and termination options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital. If readily determinable, the rate implicit in the lease is used to discount lease payments to present value; however, substantially all of the Company’s leases do not provide a readily determinable implicit rate. When the implicit rate is not determinable, the Company’s estimated incremental borrowing rate is utilized, determined on a collateralized basis, to discount lease payments based on information available at lease commencement. 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, which are based on future performance or changes in indices, are excluded from the determination of lease payments and were not significant for any of the periods presented. The Company’s lease agreements do not contain any material restrictions, covenants or any material residual value guarantees. The Company subleases certain properties that are not used in its operations. Sublease income was not significant for any of the periods presented. The table below presents the lease-related assets and liabilities recorded on the balance sheet. Leases (In millions) Classification November 1, 2019 Assets Operating lease assets Operating lease right-of-use assets $ 3,873 Finance lease assets Property, less accumulated depreciation 1 403 Total lease assets 4,276 Liabilities Current Operating Current operating lease liabilities 499 Finance Current maturities of long-term debt 49 Noncurrent Operating Noncurrent operating lease liabilities 3,942 Finance Long-term debt, excluding current maturities 481 Total lease liabilities $ 4,971 1 Finance lease assets are recorded net of accumulated amortization of $27 million as of November 1, 2019 . The table below presents the lease costs for finance and operating leases for the three and nine months ended November 1, 2019 : Lease Cost (In millions) Three Months Ended November 1, 2019 Nine Months Ended November 1, 2019 Finance lease cost Amortization of leased assets $ 11 $ 28 Interest on lease liabilities 7 21 Operating lease cost 1 185 524 Total lease cost $ 203 $ 573 1 Includes short-term leases, variable lease costs, and sublease income, which are immaterial. The future minimum rental payments required under operating and finance lease obligations as of November 1, 2019 having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: Maturity of lease liabilities (In millions) Operating Leases 1 Finance Leases 2 Total 2019 $ 124 $ 15 $ 139 2020 668 78 746 2021 652 77 729 2022 661 80 741 2023 571 75 646 After 2023 3,006 381 3,387 Total lease payments 5,682 706 6,388 Less: interest 3 (1,241 ) (176 ) (1,417 ) Present value of lease liabilities 4 $ 4,441 $ 530 $ 4,971 1 Operating lease payments include $249 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $299 million of minimum lease payments for leases signed but not yet commenced. 2 Finance lease payments include $11 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $233 million of minimum lease payments for leases signed but not yet commenced. 3 Calculated using the lease-specific incremental borrowing rate. 4 Includes the current portion of $499 million for operating leases and $49 million for finance leases. Lease Term and Discount Rate November 1, 2019 Weighted-average remaining lease term (years) Operating leases 10.64 Finance leases 10.00 Weighted-average discount rate Operating leases 4.26 % Finance leases 6.42 % Other Information (In millions) Nine Months Ended November 1, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows used for operating leases $ 629 Operating cash flows used for finance leases 22 Financing cash flows used for finance leases 37 Leased assets obtained in exchange for new finance lease liabilities 156 Leased assets obtained in exchange for new operating lease liabilities 374 Prior Period Disclosures As a result of the adoption of ASC 842, Leases , on February 2, 2019, the Company is required to present future minimum lease payments for operating and finance lease obligations having initial or remaining non-cancelable lease terms in excess of one year. These future minimum lease payments were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under previous lease guidance. Commitments as of February 1, 2019 were as follows: February 1, 2019 Fiscal Year (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 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Nov. 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) Three Months Ended Nine Months Ended November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 Products $ 16,379 $ 16,293 $ 53,259 $ 52,527 Services 545 665 1,690 1,999 Other 464 457 1,172 1,136 Net sales $ 17,388 $ 17,415 $ 56,121 $ 55,662 Revenue from products primarily relates to in-store and online merchandise purchases, which are recognized at the point in time when the customer obtains control of the merchandise. This occurs at the time of in-store purchase or delivery of the product to the customer. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. The merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets. Anticipated sales returns reflected in other current liabilities were $227 million at November 1, 2019 and $229 million at November 2, 2018 . The associated right of return assets reflected in other current assets were $148 million at November 1, 2019 and $151 million at November 2, 2018 . Revenues from services primarily relate to professional installation services the Company provides through subcontractors related to merchandise purchased by a customer. In certain instances, installation services include materials provided by the subcontractor, and both product and installation are included in service revenue. The Company recognizes revenue associated with services as they are rendered, and the majority of services are completed within one week from initiation. 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 $778 million at November 1, 2019 and $945 million at November 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 $444 million and $411 million at November 1, 2019 , and November 2, 2018 , respectively, and these amounts are included in deferred revenue on the consolidated balance sheets. 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 three and nine months ended November 1, 2019 and November 2, 2018 . 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 $103 million and $303 million for the three and nine months ended November 1, 2019 , respectively, and $97 million and $293 million for the three and nine months ended November 2, 2018 , 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 November 1, 2019 and November 2, 2018 , 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 $45 million and $141 million for the three and nine months ended November 1, 2019 , respectively, and $47 million and $141 million for the three and nine months ended November 2, 2018 , respectively. Disaggregation of Revenues The following table presents the Company’s net sales disaggregated by merchandise division: Three Months Ended Nine Months Ended November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 (In millions) Total Sales % Total Sales % Total Sales % Total Sales % Home Décor ¹ $ 6,374 37 $ 6,230 36 $ 19,639 35 $ 19,239 35 Building Products ² 5,961 34 5,939 34 17,865 32 17,913 32 Hardlines ³ 4,515 26 4,399 25 17,134 30 16,392 29 Other 538 3 847 5 1,483 3 2,118 4 Total $ 17,388 100 $ 17,415 100 $ 56,121 100 $ 55,662 100 Note: Net sales for certain merchandise divisions were reclassified in the third quarter of fiscal year 2019. As a result, prior periods have been reclassified to conform to the current quarter presentation. 1 Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint 2 Building Products includes the following product categories: Lighting, Lumber & Building Materials, Millwork, and Rough Plumbing & Electrical 3 Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools The following table presents the Company’s net sales disaggregated by geographical area: (In millions) Three Months Ended Nine Months Ended November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 United States $ 16,131 $ 15,991 $ 52,225 $ 51,319 International 1,257 1,424 3,896 4,343 Net Sales $ 17,388 $ 17,415 $ 56,121 $ 55,662 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Nov. 01, 2019 | |
Fair Value Disclosures [Abstract] | |
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 following table presents the Company’s financial assets measured at fair value on a recurring basis as of November 1, 2019 , November 2, 2018 , and February 1, 2019 . The fair values of these instruments approximated amortized costs. Fair Value Measurements at (In millions) Measurement Level November 1, 2019 November 2, 2018 February 1, 2019 Short-term investments: Available-for-sale securities Money market funds Level 1 $ 83 $ 181 $ 207 Agency securities Level 2 19 10 10 U.S. Treasury securities Level 1 13 — — Corporate debt securities Level 2 12 — 1 Certificates of deposit Level 1 — 17 — Total short-term investments $ 127 $ 208 $ 218 Long-term investments: Available-for-sale securities U.S. Treasury securities Level 1 $ 258 $ — $ — Corporate debt securities Level 2 75 224 191 Agency securities Level 2 30 66 65 Total long-term investments $ 363 $ 290 $ 256 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 During the three and nine months ended November 1, 2019 , and the three and nine months ended November 2, 2018 , the Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were certain long-lived assets. The Company reviews the carrying amounts of long-lived assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. 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 quarterly against historical patterns, projections of future profitability and whether it is more likely than not the assets 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 (disposal) 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. During the three months ended November 1, 2019, the Company began a strategic review of its Canadian operations, and it was determined to be more likely than not the assets associated with certain Canadian stores 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. Based on this evaluation, certain long-lived assets were written down to their fair value of $40 million resulting in impairment charges of $53 million . These non-cash impairment charges are included in selling, general and administrative expense in the accompanying consolidated statements of current and retained 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 serviced 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. These non-cash impairment charges are included in selling, general and administrative expense in the accompanying consolidated statements of current and retained earnings. 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 immaterial 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 , with $90 million associated with the location closures and $9 million associated with the exit of non-core activities. These non-cash impairment charges are included in selling, general and administrative expense in the accompanying consolidated statements of current and retained earnings. In addition, as part of the Company’s strategic reassessment process, during the three months ended November 2, 2018, it was determined to be 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, and therefore, these assets experienced a triggering event and were evaluated for recoverability. Operating 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 . These non-cash impairment charges are included in selling, general and administrative expense in the accompanying consolidated statements of current and retained 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 fiscal year 2018 as part of the Company’s strategic reassessment of the business as well as the Company’s strategic review of its Canadian operations in fiscal year 2019. The following table presents the Company’s non-financial assets measured at estimated fair value on a nonrecurring basis and the resulting long-lived asset impairment losses included in earnings. Because assets subject to long-lived asset impairment are 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 November 1, 2019 and November 2, 2018 . Fair Value Measurements Impairment Losses (In millions) November 1, 2019 Three Months Ended November 1, 2019 Nine Months Ended November 1, 2019 Assets-held-for-use: Operating locations $ 46 $ 53 $ 61 Total $ 46 $ 53 $ 61 Fair Value Measurements Impairment Losses (In millions) November 2, 2018 Three Months Ended November 2, 2018 Nine Months Ended November 2, 2018 Assets-held-for-use: Operating locations $ 473 $ 112 $ 329 Total $ 473 $ 112 $ 329 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, short-term borrowings, 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 finance and capitalized lease obligations, are as follows: November 1, 2019 November 2, 2018 February 1, 2019 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 16,646 $ 18,184 $ 14,718 $ 14,430 $ 14,721 $ 14,473 Mortgage notes (Level 2) 5 5 6 6 6 6 Long-term debt (excluding finance and capitalized lease obligations) $ 16,651 $ 18,189 $ 14,724 $ 14,436 $ 14,727 $ 14,479 |
Restricted Investment Balances
Restricted Investment Balances | 9 Months Ended |
Nov. 01, 2019 | |
Restricted Investment Balances | |
Restricted Investment Balances | Restricted Investment Balances - Short-term and long-term investments include restricted balances pledged as collateral primarily for the Company’s extended protection plan program. Restricted balances included in short-term investments were $127 million at November 1, 2019 , $191 million at November 2, 2018 , and $218 million at February 1, 2019 . Restricted balances included in long-term investments were $363 million at November 1, 2019 , $255 million at November 2, 2018 , and $256 million at February 1, 2019 . |
Property and Accumulated Deprec
Property and Accumulated Depreciation | 9 Months Ended |
Nov. 01, 2019 | |
Property and Accumulated Depreciation | |
Property and Accumulated Depreciation | Property and Accumulated Depreciation - Property is shown net of accumulated depreciation of $17.3 billion at November 1, 2019 , $17.7 billion at November 2, 2018 , and $17.4 billion at February 1, 2019 . The Company recognized depreciation expense, inclusive of amounts presented in cost of sales and depreciation and amortization, of $ 325 million and $ 968 million for the three and nine months ended November 1, 2019 and $ 444 million and $ 1.2 billion for the three and nine months ended November 2, 2018 . |
Exit Activities
Exit Activities | 9 Months Ended |
Nov. 01, 2019 | |
Restructuring and Related Activities [Abstract] | |
Exit Activities | Exit Activities - During fiscal years 2018 and 2019, the Company has incurred costs associated with an ongoing strategic reassessment of its business to drive an increased focus on its core home improvement operations and to improve overall operating performance and profitability. As a result of this reassessment, the Company decided to exit certain activities and close certain locations as further described below. Expenses associated with long-lived asset impairment, accelerated depreciation, discontinued projects, severance, and lease obligations, are included in selling, general and administrative expense in the consolidated statement of current and retained earnings. Inventory adjustments to net realizable value are included in cost of sales in the consolidated statement of current and retained earnings. 2019 Canada Restructuring During the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations, and as a result, recognized pre-tax charges of $53 million associated with long-lived asset impairment. Subsequent to the end of the Company’s third quarter of fiscal 2019, a decision was made to close 34 under-performing stores in Canada and take additional restructuring actions to improve future sales and profitability of the Canadian operations. See Note 15 for additional information regarding the decision and associated impacts. A summary of the significant charges associated with the 2019 strategic review of the Canadian operations, are as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 1, 2019 November 1, 2019 November 1, 2019 Long-lived asset impairment $ 53 $ 53 $ 53 Total $ 53 $ 53 $ 53 Orchard Supply Hardware (Orchard) On August 17, 2018, the Company approved plans to exit its Orchard operations by closing all 99 Orchard stores, which were located in California, Oregon and Florida, as well as the distribution facility that serviced the Orchard stores, and the Orchard corporate office. All facilities were closed by the end of fiscal year 2018. A summary of the significant charges associated with the exit of the Orchard operations is as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ — $ 206 $ 206 Accelerated depreciation and amortization 103 103 103 Discontinued project write-offs — 24 24 Severance costs 11 11 11 Lease obligation costs for closed locations 9 9 217 Total $ 123 $ 353 $ 561 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 by the end of fiscal year 2018. A summary of the significant charges associated with the closure of these stores is as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ 90 $ 90 $ 90 Severance costs 21 21 32 Discontinued project write-offs 10 10 10 Lease obligation costs for closed locations — — 89 Accelerated depreciation and amortization — — 50 Total $ 121 $ 121 $ 271 Other Non-Core Activities During the third quarter ended November 2, 2018, the Company decided to pursue an exit of certain immaterial non-core activities within its U.S. home improvement business. A summary of the significant charges incurred as a result of these decisions is as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ 9 $ 9 $ 9 Inventory adjustments to net realizable value 5 5 7 Other closing costs — — 27 Severance costs — — 16 Total $ 14 $ 14 $ 59 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. A summary of the significant charges incurred as a result of the exit of the Company’s Mexico operations is as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ 22 $ 22 $ 244 Total $ 22 $ 22 $ 244 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Nov. 01, 2019 | |
Long-Term Debt | |
Long-Term Debt | Long-Term Debt - During the first quarter of fiscal 2019, the Company issued $3.0 billion of unsecured notes as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) April 5, 2019 $ 1,500 April 2029 Fixed 3.650% $ 9 April 5, 2019 $ 1,500 April 2049 Fixed 4.550% $ 19 Interest on the notes issued in 2019 is payable semiannually in arrears in April and October of each year until maturity. The indenture governing the notes issued in 2019 contains a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption. The indenture also contains a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% |
Short-Term Borrowings
Short-Term Borrowings | 9 Months Ended |
Nov. 01, 2019 | |
Debt Disclosure [Abstract] | |
Short-Term Borrowings | Short-Term Borrowings - In September 2019, 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 8, 2020). 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 November 1, 2019 . The 364-Day Credit Agreement, along with the $1.98 billion five year unsecured second amended and restated credit agreement (Second Amended and Restated Credit Agreement), support our commercial paper program. The amount available to be drawn under the 364-Day Credit Agreement and the Second Amended and Restated Credit Agreement is reduced by the amount of borrowings under our commercial paper program. Outstanding borrowings under the Company’s commercial paper program were $637 million , with a weighted average interest rate of 1.97% , as of November 1, 2019 . As of November 2, 2018 , there were no |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Nov. 01, 2019 | |
Shareholders' Equity | |
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, which may be made under pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, 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 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 program with no expiration, which was announced on the same day. As of November 1, 2019 , the Company had $10.3 billion remaining in its share repurchase program. In November 2018, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $270 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $270 million to the financial institution using cash on hand and took delivery of 2.6 million shares. The Company finalized the transaction and received an additional 0.3 million shares in February 2019. In March 2019, the Company entered into a variable notional ASR agreement with a third-party financial institution to repurchase $350 million to $500 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand and took delivery of 2.9 million shares. The Company finalized the transaction to receive an additional 0.3 million shares prior to the end of the first quarter. Subsequent to the end of the first quarter, the Company received a $150 million cash payment from the third-party financial institution, which is equal to the difference between the $500 million payment made at inception and the final notional amount of $350 million . In May 2019, the Company entered into a variable notional ASR agreement with a third-party financial institution to repurchase $990 million to $1.4 billion of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $1.4 billion to the financial institution using cash on hand and took delivery of 8.9 million shares. The Company finalized the transaction and received an additional 1.0 million shares and a $420 million cash payment from the third-party financial institution prior to the end of the second quarter. The cash payment received is equal to the difference between the $1.4 billion payment made at inception and the final notional amount of $990 million . In August 2019, the Company entered into a variable notional ASR agreement with a third-party financial institution to repurchase $350 million to $500 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand and took delivery of 2.8 million shares. The Company finalized the transaction and received an additional 0.8 million shares and a $103 million cash payment from the third-party financial institution prior to the end of the third quarter. The cash payment received is equal to the difference between the $500 million payment made at inception and the final notional amount of $397 million . Under the terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the applicable financial institution or be required to deliver additional shares or cash to such financial institution. The Company controlled the election to either deliver additional shares or cash to the financial institution, if required, and the ASR agreements were 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 of the ASR agreements was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the applicable ASR agreement. The initial repurchase of shares under the 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. Each ASR agreement was accounted for as a treasury stock transaction and forward stock purchase contract. 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 contract was considered indexed to the Company’s own stock and was classified as an equity instrument. In addition, during the three and nine months ended November 1, 2019 , the Company repurchased shares of its common stock through the open market totaling 4.1 million and 18.1 million shares, respectively, for a cost of $438 million and $1.9 billion , respectively. 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 share-based awards. Shares repurchased for the three and nine months ended November 1, 2019 and November 2, 2018 were as follows: Three Months Ended November 1, 2019 November 2, 2018 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 7.7 $ 835 5.7 $ 620 Shares withheld from employees 0.2 23 0.2 25 Total share repurchases 7.9 $ 858 5.9 $ 645 1 Reductions of $827 million and $603 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended November 1, 2019 and November 2, 2018 , respectively. Nine Months Ended November 1, 2019 November 2, 2018 (In millions) Shares Cost 2 Shares Cost 2 Share repurchase program 35.3 $ 3,618 25.9 $ 2,470 Shares withheld from employees 0.3 36 0.3 38 Total share repurchases 35.6 $ 3,654 26.2 $ 2,508 2 Reductions of $3.5 billion and $2.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the nine months ended November 1, 2019 and November 2, 2018 , respectively. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Nov. 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 the three and nine months ended November 1, 2019 and November 2, 2018 : Three Months Ended Nine Months Ended (In millions, except per share data) November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 Basic earnings per common share: Net earnings $ 1,049 $ 629 $ 3,771 $ 3,138 Less: Net earnings allocable to participating securities (3 ) (1 ) (11 ) (10 ) Net earnings allocable to common shares, basic $ 1,046 $ 628 $ 3,760 $ 3,128 Weighted-average common shares outstanding 769 806 782 815 Basic earnings per common share $ 1.36 $ 0.78 $ 4.81 $ 3.84 Diluted earnings per common share: Net earnings $ 1,049 $ 629 $ 3,771 $ 3,138 Less: Net earnings allocable to participating securities (3 ) (1 ) (11 ) (10 ) Net earnings allocable to common shares, diluted $ 1,046 $ 628 $ 3,760 $ 3,128 Weighted-average common shares outstanding 769 806 782 815 Dilutive effect of non-participating share-based awards 1 1 1 1 Weighted-average common shares, as adjusted 770 807 783 816 Diluted earnings per common share $ 1.36 $ 0.78 $ 4.80 $ 3.83 Stock options to purchase 0.9 million and 0.9 million shares of common stock were anti-dilutive for the three and nine months ended November 1, 2019 , respectively. Stock options to purchase 0.2 million and 0.4 million shares of common stock were anti-dilutive for the three and nine months ended November 2, 2018 |
Income Taxes
Income Taxes | 9 Months Ended |
Nov. 01, 2019 | |
Income Taxes | |
Income Taxes | Income Taxes - The Company’s effective income tax rates were 24.0% and 22.2% for the three and nine months ended November 1, 2019 , respectively, and 21.8% and 23.8% for the three and nine months ended November 2, 2018 , respectively. The increase in the effective tax rate for the quarter is primarily due to an increase in pre-tax earnings as compared to the three months ended November 2, 2018, as well as the favorable discrete event related to stock compensation was smaller in 2019 as compared to 2018. The lower effective income tax rate for the nine months ended November 1, 2019 |
Supplemental Disclosure
Supplemental Disclosure | 9 Months Ended |
Nov. 01, 2019 | |
Supplemental Disclosure | |
Supplemental Disclosure | Supplemental Disclosure Net interest expense is comprised of the following: Three Months Ended Nine Months Ended (In millions) November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 Long-term debt $ 171 $ 145 $ 498 $ 437 Finance lease obligations 7 — 21 — Capitalized lease obligations — 15 — 44 Interest income (5 ) (9 ) (24 ) (21 ) Interest capitalized — — (1 ) (2 ) Interest on tax uncertainties — — (2 ) — Other 4 2 16 9 Interest - net $ 177 $ 153 $ 508 $ 467 Supplemental disclosures of cash flow information: Nine Months Ended (In millions) November 1, 2019 November 2, 2018 Cash paid for interest, net of amount capitalized $ 647 $ 555 Cash paid for income taxes - net $ 1,029 $ 1,069 Non-cash investing and financing activities: Non-cash property acquisitions 1 $ 251 $ 42 Cash dividends declared but not paid $ 423 $ 387 1 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Nov. 01, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events - As part of a strategic review of Canadian operations, subsequent to the end of the Company’s third quarter of fiscal 2019, the Company decided to close 34 under-performing stores in Canada and execute additional restructuring actions to improve future sales and profitability of the remaining Canadian operations. As a result of these actions, the Company expects additional operating costs and pre-tax charges during the fourth quarter of 2019 of $175 to $225 million associated with inventory liquidation, accelerated depreciation and amortization, severance, and other costs. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Nov. 01, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of November 1, 2019 , and November 2, 2018 , the results of operations, comprehensive income, and shareholders’ equity for the three and nine months ended November 1, 2019 , and November 2, 2018 , and cash flows for the nine months ended November 1, 2019 and November 2, 2018 . These interim consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended February 1, 2019 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to current classifications. |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted Effective February 2, 2019, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), and all related amendments, using the optional transition approach and recognized the cumulative impact of adoption in the opening balance of retained earnings. Under ASU 2016-02, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. The Company adopted the standard utilizing the transition election to not restate comparative periods for the impact of adopting the standard and recognizing the cumulative impact of adoption in the opening balance of retained earnings. The Company elected the package of transition expedients available for expired or existing contracts, which allowed the carry-forward of historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the standard resulted in the recording of additional net lease-related assets and lease-related liabilities of approximately $3.6 billion and $3.9 billion , respectively, as of February 2, 2019. The difference between the additional lease assets and lease liabilities, net of the $87 million deferred tax impact, was $263 million and was recorded as an adjustment to retained earnings. This adjustment to retained earnings primarily represents the write-off of right-of-use assets associated with closed locations, net of previously established store closing lease obligations as well as the derecognition of build-to-suit leases. The adoption of this standard by the Company did not have a material impact on its consolidated statements of earnings, comprehensive income or cash flows and will have no impact on the Company’s debt covenant compliance under its current agreements. See Note 3 for additional details of the Company’s leases. Accounting Pronouncements Not Yet Adopted |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Leases [Abstract] | |
Operating and Finance Leases, Assets and Liabilities | The table below presents the lease-related assets and liabilities recorded on the balance sheet. Leases (In millions) Classification November 1, 2019 Assets Operating lease assets Operating lease right-of-use assets $ 3,873 Finance lease assets Property, less accumulated depreciation 1 403 Total lease assets 4,276 Liabilities Current Operating Current operating lease liabilities 499 Finance Current maturities of long-term debt 49 Noncurrent Operating Noncurrent operating lease liabilities 3,942 Finance Long-term debt, excluding current maturities 481 Total lease liabilities $ 4,971 1 Finance lease assets are recorded net of accumulated amortization of $27 million as of November 1, 2019 . |
Schedule of Finance and Operating Lease Costs | The table below presents the lease costs for finance and operating leases for the three and nine months ended November 1, 2019 : Lease Cost (In millions) Three Months Ended November 1, 2019 Nine Months Ended November 1, 2019 Finance lease cost Amortization of leased assets $ 11 $ 28 Interest on lease liabilities 7 21 Operating lease cost 1 185 524 Total lease cost $ 203 $ 573 1 Includes short-term leases, variable lease costs, and sublease income, which are immaterial. |
Finance Lease Liability, Maturity | The future minimum rental payments required under operating and finance lease obligations as of November 1, 2019 having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: Maturity of lease liabilities (In millions) Operating Leases 1 Finance Leases 2 Total 2019 $ 124 $ 15 $ 139 2020 668 78 746 2021 652 77 729 2022 661 80 741 2023 571 75 646 After 2023 3,006 381 3,387 Total lease payments 5,682 706 6,388 Less: interest 3 (1,241 ) (176 ) (1,417 ) Present value of lease liabilities 4 $ 4,441 $ 530 $ 4,971 1 Operating lease payments include $249 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $299 million of minimum lease payments for leases signed but not yet commenced. 2 Finance lease payments include $11 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $233 million of minimum lease payments for leases signed but not yet commenced. 3 Calculated using the lease-specific incremental borrowing rate. 4 Includes the current portion of $499 million for operating leases and $49 million for finance leases. |
Operating Lease Liability, Maturity | The future minimum rental payments required under operating and finance lease obligations as of November 1, 2019 having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: Maturity of lease liabilities (In millions) Operating Leases 1 Finance Leases 2 Total 2019 $ 124 $ 15 $ 139 2020 668 78 746 2021 652 77 729 2022 661 80 741 2023 571 75 646 After 2023 3,006 381 3,387 Total lease payments 5,682 706 6,388 Less: interest 3 (1,241 ) (176 ) (1,417 ) Present value of lease liabilities 4 $ 4,441 $ 530 $ 4,971 1 Operating lease payments include $249 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $299 million of minimum lease payments for leases signed but not yet commenced. 2 Finance lease payments include $11 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $233 million of minimum lease payments for leases signed but not yet commenced. 3 Calculated using the lease-specific incremental borrowing rate. 4 Includes the current portion of $499 million for operating leases and $49 million for finance leases. |
Operating and Finance Lease, Additional Information | Lease Term and Discount Rate November 1, 2019 Weighted-average remaining lease term (years) Operating leases 10.64 Finance leases 10.00 Weighted-average discount rate Operating leases 4.26 % Finance leases 6.42 % Other Information (In millions) Nine Months Ended November 1, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows used for operating leases $ 629 Operating cash flows used for finance leases 22 Financing cash flows used for finance leases 37 Leased assets obtained in exchange for new finance lease liabilities 156 Leased assets obtained in exchange for new operating lease liabilities 374 |
Schedule of Future Minimum Rental Payments for Operating Leases | Commitments as of February 1, 2019 were as follows: February 1, 2019 Fiscal Year (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 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Revenue Recognition | |
Sources of Revenue | The following table presents the Company’s sources of revenue: (In millions) Three Months Ended Nine Months Ended November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 Products $ 16,379 $ 16,293 $ 53,259 $ 52,527 Services 545 665 1,690 1,999 Other 464 457 1,172 1,136 Net sales $ 17,388 $ 17,415 $ 56,121 $ 55,662 |
Disaggregation of Revenues | The following table presents the Company’s net sales disaggregated by merchandise division: Three Months Ended Nine Months Ended November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 (In millions) Total Sales % Total Sales % Total Sales % Total Sales % Home Décor ¹ $ 6,374 37 $ 6,230 36 $ 19,639 35 $ 19,239 35 Building Products ² 5,961 34 5,939 34 17,865 32 17,913 32 Hardlines ³ 4,515 26 4,399 25 17,134 30 16,392 29 Other 538 3 847 5 1,483 3 2,118 4 Total $ 17,388 100 $ 17,415 100 $ 56,121 100 $ 55,662 100 Note: Net sales for certain merchandise divisions were reclassified in the third quarter of fiscal year 2019. As a result, prior periods have been reclassified to conform to the current quarter presentation. 1 Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint 2 Building Products includes the following product categories: Lighting, Lumber & Building Materials, Millwork, and Rough Plumbing & Electrical 3 Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools |
Net Sales Disaggregated by Geographical Area | The following table presents the Company’s net sales disaggregated by geographical area: (In millions) Three Months Ended Nine Months Ended November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 United States $ 16,131 $ 15,991 $ 52,225 $ 51,319 International 1,257 1,424 3,896 4,343 Net Sales $ 17,388 $ 17,415 $ 56,121 $ 55,662 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements - Recurring Basis | The following table presents the Company’s financial assets measured at fair value on a recurring basis as of November 1, 2019 , November 2, 2018 , and February 1, 2019 . The fair values of these instruments approximated amortized costs. Fair Value Measurements at (In millions) Measurement Level November 1, 2019 November 2, 2018 February 1, 2019 Short-term investments: Available-for-sale securities Money market funds Level 1 $ 83 $ 181 $ 207 Agency securities Level 2 19 10 10 U.S. Treasury securities Level 1 13 — — Corporate debt securities Level 2 12 — 1 Certificates of deposit Level 1 — 17 — Total short-term investments $ 127 $ 208 $ 218 Long-term investments: Available-for-sale securities U.S. Treasury securities Level 1 $ 258 $ — $ — Corporate debt securities Level 2 75 224 191 Agency securities Level 2 30 66 65 Total long-term investments $ 363 $ 290 $ 256 |
Fair Value of Financial Instruments | Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding finance and capitalized lease obligations, are as follows: November 1, 2019 November 2, 2018 February 1, 2019 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 16,646 $ 18,184 $ 14,718 $ 14,430 $ 14,721 $ 14,473 Mortgage notes (Level 2) 5 5 6 6 6 6 Long-term debt (excluding finance and capitalized lease obligations) $ 16,651 $ 18,189 $ 14,724 $ 14,436 $ 14,727 $ 14,479 |
Fair Value Measurements - Nonrecurring Basis | The following table presents the Company’s non-financial assets measured at estimated fair value on a nonrecurring basis and the resulting long-lived asset impairment losses included in earnings. Because assets subject to long-lived asset impairment are 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 November 1, 2019 and November 2, 2018 . Fair Value Measurements Impairment Losses (In millions) November 1, 2019 Three Months Ended November 1, 2019 Nine Months Ended November 1, 2019 Assets-held-for-use: Operating locations $ 46 $ 53 $ 61 Total $ 46 $ 53 $ 61 Fair Value Measurements Impairment Losses (In millions) November 2, 2018 Three Months Ended November 2, 2018 Nine Months Ended November 2, 2018 Assets-held-for-use: Operating locations $ 473 $ 112 $ 329 Total $ 473 $ 112 $ 329 |
Exit Activities (Tables)
Exit Activities (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Exit Activity Expenses | A summary of the significant charges associated with the exit of the Orchard operations is as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ — $ 206 $ 206 Accelerated depreciation and amortization 103 103 103 Discontinued project write-offs — 24 24 Severance costs 11 11 11 Lease obligation costs for closed locations 9 9 217 Total $ 123 $ 353 $ 561 Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ 9 $ 9 $ 9 Inventory adjustments to net realizable value 5 5 7 Other closing costs — — 27 Severance costs — — 16 Total $ 14 $ 14 $ 59 A summary of the significant charges associated with the 2019 strategic review of the Canadian operations, are as follows: Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 1, 2019 November 1, 2019 November 1, 2019 Long-lived asset impairment $ 53 $ 53 $ 53 Total $ 53 $ 53 $ 53 Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ 22 $ 22 $ 244 Total $ 22 $ 22 $ 244 Costs Incurred Three Months Ended Nine Months Ended Cumulative Amount (In millions) November 2, 2018 November 2, 2018 November 1, 2019 Long-lived asset impairment $ 90 $ 90 $ 90 Severance costs 21 21 32 Discontinued project write-offs 10 10 10 Lease obligation costs for closed locations — — 89 Accelerated depreciation and amortization — — 50 Total $ 121 $ 121 $ 271 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Long-Term Debt | |
Schedule of Unsecured Notes Issued | During the first quarter of fiscal 2019, the Company issued $3.0 billion of unsecured notes as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) April 5, 2019 $ 1,500 April 2029 Fixed 3.650% $ 9 April 5, 2019 $ 1,500 April 2049 Fixed 4.550% $ 19 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Shareholders' Equity | |
Schedule of Share Repurchases | Shares repurchased for the three and nine months ended November 1, 2019 and November 2, 2018 were as follows: Three Months Ended November 1, 2019 November 2, 2018 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 7.7 $ 835 5.7 $ 620 Shares withheld from employees 0.2 23 0.2 25 Total share repurchases 7.9 $ 858 5.9 $ 645 1 Reductions of $827 million and $603 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended November 1, 2019 and November 2, 2018 , respectively. Nine Months Ended November 1, 2019 November 2, 2018 (In millions) Shares Cost 2 Shares Cost 2 Share repurchase program 35.3 $ 3,618 25.9 $ 2,470 Shares withheld from employees 0.3 36 0.3 38 Total share repurchases 35.6 $ 3,654 26.2 $ 2,508 2 Reductions of $3.5 billion and $2.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the nine months ended November 1, 2019 and November 2, 2018 , respectively. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Earnings Per Share | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles earnings per common share for the three and nine months ended November 1, 2019 and November 2, 2018 : Three Months Ended Nine Months Ended (In millions, except per share data) November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 Basic earnings per common share: Net earnings $ 1,049 $ 629 $ 3,771 $ 3,138 Less: Net earnings allocable to participating securities (3 ) (1 ) (11 ) (10 ) Net earnings allocable to common shares, basic $ 1,046 $ 628 $ 3,760 $ 3,128 Weighted-average common shares outstanding 769 806 782 815 Basic earnings per common share $ 1.36 $ 0.78 $ 4.81 $ 3.84 Diluted earnings per common share: Net earnings $ 1,049 $ 629 $ 3,771 $ 3,138 Less: Net earnings allocable to participating securities (3 ) (1 ) (11 ) (10 ) Net earnings allocable to common shares, diluted $ 1,046 $ 628 $ 3,760 $ 3,128 Weighted-average common shares outstanding 769 806 782 815 Dilutive effect of non-participating share-based awards 1 1 1 1 Weighted-average common shares, as adjusted 770 807 783 816 Diluted earnings per common share $ 1.36 $ 0.78 $ 4.80 $ 3.83 |
Supplemental Disclosure (Tables
Supplemental Disclosure (Tables) | 9 Months Ended |
Nov. 01, 2019 | |
Supplemental Disclosure | |
Net Interest Expense | Net interest expense is comprised of the following: Three Months Ended Nine Months Ended (In millions) November 1, 2019 November 2, 2018 November 1, 2019 November 2, 2018 Long-term debt $ 171 $ 145 $ 498 $ 437 Finance lease obligations 7 — 21 — Capitalized lease obligations — 15 — 44 Interest income (5 ) (9 ) (24 ) (21 ) Interest capitalized — — (1 ) (2 ) Interest on tax uncertainties — — (2 ) — Other 4 2 16 9 Interest - net $ 177 $ 153 $ 508 $ 467 |
Supplemental Disclosures of Cash Flow Information | Supplemental disclosures of cash flow information: Nine Months Ended (In millions) November 1, 2019 November 2, 2018 Cash paid for interest, net of amount capitalized $ 647 $ 555 Cash paid for income taxes - net $ 1,029 $ 1,069 Non-cash investing and financing activities: Non-cash property acquisitions 1 $ 251 $ 42 Cash dividends declared but not paid $ 423 $ 387 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Feb. 02, 2019 | Nov. 01, 2019 | Aug. 02, 2019 | Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | Feb. 02, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Operating lease assets | $ 3,873 | ||||||
Present value of lease liabilities | 4,441 | ||||||
Retained earnings | $ 2,238 | $ 2,439 | $ 3,452 | $ 5,156 | $ 5,517 | $ 5,425 | |
ASU 2016-02 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Operating lease assets | $ 3,600 | ||||||
Present value of lease liabilities | 3,900 | ||||||
Deferred income tax expense | 87 | ||||||
Retained earnings | $ 263 |
Change in Accounting Principle
Change in Accounting Principle (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cost of sales | $ 11,748 | $ 12,038 | $ 38,159 | $ 37,653 |
Selling, general and administrative | (3,772) | (3,997) | (11,682) | (12,315) |
Depreciation and amortization | $ (310) | (423) | $ (924) | (1,108) |
Shipping and Handling Expenses | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cost of sales | 283 | 862 | ||
Selling, general and administrative | 273 | 832 | ||
Depreciation and amortization | $ 10 | $ 30 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 9 Months Ended |
Nov. 01, 2019option | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, renewal terms | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, term | 5 years |
Operating and finance leases, renewal options | 4 |
Minimum | Equipment | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, term | 20 years |
Operating and finance leases, renewal options | 6 |
Maximum | Equipment | |
Lessee, Lease, Description [Line Items] | |
Operating and finance lease, term | 7 years |
Leases - Balance Sheet Informat
Leases - Balance Sheet Information (Details) $ in Millions | Nov. 01, 2019USD ($) |
Assets | |
Operating lease assets | $ 3,873 |
Finance lease assets | 403 |
Total lease assets | 4,276 |
Liabilities | |
Current operating lease liabilities | 499 |
Current maturities of long-term debt | 49 |
Noncurrent operating lease liabilities | 3,942 |
Long-term debt, excluding current maturities | 481 |
Total lease liabilities | 4,971 |
Accumulated amortization | $ 27 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Finance lease cost | ||||
Amortization of leased assets | $ 11 | $ 28 | ||
Interest on lease liabilities | 7 | $ 0 | 21 | $ 0 |
Operating lease cost | 185 | 524 | ||
Total lease cost | $ 203 | $ 573 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Millions | Nov. 01, 2019USD ($) |
Operating Leases | |
2019 | $ 124 |
2020 | 668 |
2021 | 652 |
2022 | 661 |
2023 | 571 |
After 2023 | 3,006 |
Total lease payments | 5,682 |
Less: interest | (1,241) |
Present value of lease liabilities | 4,441 |
Finance Leases | |
2019 | 15 |
2020 | 78 |
2021 | 77 |
2022 | 80 |
2023 | 75 |
After 2023 | 381 |
Total lease payments | 706 |
Less: interest | (176) |
Present value of lease liabilities | 530 |
Operating and Finance Leases | |
2019 | 139 |
2020 | 746 |
2021 | 729 |
2022 | 741 |
2023 | 646 |
After 2023 | 3,387 |
Total lease payments | 6,388 |
Less: interest | (1,417) |
Present value of lease liabilities | 4,971 |
Operating lease payments related to options to extend lease terms that are reasonably certain to be exercised | 249 |
Minimum lease payments for operating leases signed but not yet commenced | 299 |
Finance lease payments related to options to extend lease terms that are reasonably certain to be exercised | 11 |
Minimum lease payments for finance leases signed but not yet commenced | 233 |
Current operating lease liabilities | 499 |
Current maturities of long-term debt | $ 49 |
Leases - Lease Term and Discoun
Leases - Lease Term and Discount Rate (Details) | Nov. 01, 2019 |
Weighted-average remaining lease term (years) | |
Operating leases (in years) | 10 years 7 months 20 days |
Finance leases (in years) | 10 years |
Weighted-average discount rate | |
Operating leases | 4.26% |
Finance leases | 6.42% |
Leases - Other Information (Det
Leases - Other Information (Details) $ in Millions | 9 Months Ended |
Nov. 01, 2019USD ($) | |
Leases [Abstract] | |
Operating cash flows used for operating leases | $ 629 |
Operating cash flows used for finance leases | 22 |
Financing cash flows used for finance leases | 37 |
Leased assets obtained in exchange for new finance lease liabilities | 156 |
Leased assets obtained in exchange for new operating lease liabilities | $ 374 |
Leases - Prior Period Disclosur
Leases - Prior Period Disclosures (Details) $ in Millions | Feb. 01, 2019USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2019 | $ 595 |
2020 | 605 |
2021 | 564 |
2022 | 519 |
2023 | 473 |
Later years | 2,609 |
Total minimum lease payments | 5,365 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
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 Capital Leases, Total, Future Minimum Payments Due [Abstract] | |
2019 | 728 |
2020 | 692 |
2021 | 654 |
2022 | 606 |
2023 | 559 |
Later years | 3,392 |
Total minimum lease payments | $ 6,631 |
Revenue Recognition - Summary (
Revenue Recognition - Summary (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 17,388 | $ 17,415 | $ 56,121 | $ 55,662 |
Net sales | 100.00% | 100.00% | 100.00% | 100.00% |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 16,131 | $ 15,991 | $ 52,225 | $ 51,319 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 1,257 | 1,424 | 3,896 | 4,343 |
Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 16,379 | 16,293 | 53,259 | 52,527 |
Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 545 | 665 | 1,690 | 1,999 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 464 | 457 | 1,172 | 1,136 |
Home Decor | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 6,374 | $ 6,230 | $ 19,639 | $ 19,239 |
Net sales | 37.00% | 36.00% | 35.00% | 35.00% |
Building Products | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 5,961 | $ 5,939 | $ 17,865 | $ 17,913 |
Net sales | 34.00% | 34.00% | 32.00% | 32.00% |
Hardlines | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 4,515 | $ 4,399 | $ 17,134 | $ 16,392 |
Net sales | 26.00% | 25.00% | 30.00% | 29.00% |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 538 | $ 847 | $ 1,483 | $ 2,118 |
Net sales | 3.00% | 5.00% | 3.00% | 4.00% |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Anticipated sales returns | $ 227 | $ 229 | $ 227 | $ 229 |
Right of return assets | 148 | 151 | 148 | 151 |
Up-front payment arrangement | 778 | 945 | 778 | 945 |
Liability for stored-value cards | 444 | 411 | 444 | 411 |
Deferred revenue from extended protection plans recognized in sales | 103 | 97 | 303 | 293 |
Accrual for claims incurred | $ 45 | $ 47 | $ 141 | $ 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 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - Estimate of Fair Value - USD ($) $ in Millions | Nov. 01, 2019 | Feb. 01, 2019 | Nov. 02, 2018 |
Short-term Investments | |||
Investments, Fair Value Disclosure | |||
Investments | $ 127 | $ 218 | $ 208 |
Short-term Investments | Money market funds | Fair Value (Level 1) | |||
Investments, Fair Value Disclosure | |||
Investments | 83 | 207 | 181 |
Short-term Investments | Agency securities | Fair Value (Level 2) | |||
Investments, Fair Value Disclosure | |||
Investments | 19 | 10 | 10 |
Short-term Investments | U.S. Treasury securities | Fair Value (Level 1) | |||
Investments, Fair Value Disclosure | |||
Investments | 13 | 0 | 0 |
Short-term Investments | Corporate debt securities | Fair Value (Level 2) | |||
Investments, Fair Value Disclosure | |||
Investments | 12 | 1 | 0 |
Short-term Investments | Certificates of deposit | Fair Value (Level 1) | |||
Investments, Fair Value Disclosure | |||
Investments | 0 | 0 | 17 |
Long-term Investments | |||
Investments, Fair Value Disclosure | |||
Investments | 363 | 256 | 290 |
Long-term Investments | Agency securities | Fair Value (Level 2) | |||
Investments, Fair Value Disclosure | |||
Investments | 30 | 65 | 66 |
Long-term Investments | U.S. Treasury securities | Fair Value (Level 1) | |||
Investments, Fair Value Disclosure | |||
Investments | 258 | 0 | 0 |
Long-term Investments | Corporate debt securities | Fair Value (Level 2) | |||
Investments, Fair Value Disclosure | |||
Investments | $ 75 | $ 191 | $ 224 |
Fair Value Measurements - Ass_2
Fair Value Measurements - Assets and Liabilities Measured on a Non-Recurring Basis (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Nov. 01, 2019USD ($) | Nov. 02, 2018USD ($)storelocation | Aug. 03, 2018USD ($) | Nov. 01, 2019USD ($) | Nov. 02, 2018USD ($)storelocation | Oct. 31, 2018store | |
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | $ 53 | $ 112 | $ 61 | $ 329 | ||
Strategic Reassessment Closures | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Expected number of stores to be closed in the U.S. | store | 20 | 20 | 20 | |||
Expected number of locations expected to be closed in Canada | 31 | 31 | 31 | |||
Expected number of stores expected to be closed in Canada | store | 27 | 27 | 27 | |||
Orchard Supply Hardware | Long-lived asset impairments | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | $ 206 | |||||
Fair Value, Nonrecurring | Estimate of Fair Value | Fair Value (Level 3) | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Fair value measurement | 46 | $ 473 | 46 | $ 473 | ||
Location Closures | Fair Value, Nonrecurring | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | 90 | |||||
Location Closures | Fair Value, Nonrecurring | Estimate of Fair Value | Fair Value (Level 3) | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Fair value measurement | 81 | 81 | ||||
Canadian Store Locations | Fair Value, Nonrecurring | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | 53 | |||||
Canadian Store Locations | Fair Value, Nonrecurring | Estimate of Fair Value | Fair Value (Level 3) | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Fair value measurement | $ 40 | $ 40 | ||||
Orchard Supply Hardware | Fair Value, Nonrecurring | Estimate of Fair Value | Fair Value (Level 3) | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Fair value measurement | $ 284 | |||||
U.S. And Canada Operating Locations And Exit Of Non-Core Activities | Fair Value, Nonrecurring | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | 99 | |||||
Exit Of Non-Core Activities | Fair Value, Nonrecurring | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | $ 9 | |||||
Mexico Operation Locations And Corporate Facility | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Number of locations evaluated for recoverability | location | 13 | |||||
Mexico Operation Locations And Corporate Facility | Fair Value, Nonrecurring | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Asset impairment charges | $ 22 | |||||
Mexico Operation Locations And Corporate Facility | Fair Value, Nonrecurring | Estimate of Fair Value | Fair Value (Level 3) | ||||||
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items] | ||||||
Fair value measurement | $ 107 | $ 107 |
Fair Value Measurements - Long-
Fair Value Measurements - Long-Lived Asset Impairment Losses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Asset impairment charges | $ 53 | $ 112 | $ 61 | $ 329 |
Operating Locations | ||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Asset impairment charges | 53 | 112 | 61 | 329 |
Estimate of Fair Value | Fair Value, Nonrecurring | Fair Value (Level 3) | ||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Fair value measurement | 46 | 473 | 46 | 473 |
Estimate of Fair Value | Operating Locations | Fair Value, Nonrecurring | Fair Value (Level 3) | ||||
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items] | ||||
Fair value measurement | $ 46 | $ 473 | $ 46 | $ 473 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Nov. 01, 2019 | Feb. 01, 2019 | Nov. 02, 2018 |
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | $ 16,651 | $ 14,727 | $ 14,724 |
Unsecured Notes | |||
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | 16,646 | 14,721 | 14,718 |
Mortgage Notes | |||
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | 5 | 6 | 6 |
Estimate of Fair Value | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | 18,189 | 14,479 | 14,436 |
Estimate of Fair Value | Unsecured Notes | Fair Value (Level 1) | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | 18,184 | 14,473 | 14,430 |
Estimate of Fair Value | Mortgage Notes | Fair Value (Level 2) | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | $ 5 | $ 6 | $ 6 |
Restricted Investment Balances
Restricted Investment Balances (Details) - USD ($) $ in Millions | Nov. 01, 2019 | Feb. 01, 2019 | Nov. 02, 2018 |
Restricted Investment Balances | |||
Restricted balances included in short-term investments | $ 127 | $ 218 | $ 191 |
Restricted balances included in long-term investments | $ 363 | $ 256 | $ 255 |
Property and Accumulated Depr_2
Property and Accumulated Depreciation (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | Feb. 01, 2019 | |
Property and Accumulated Depreciation | |||||
Accumulated depreciation | $ 17,300 | $ 17,700 | $ 17,300 | $ 17,700 | $ 17,400 |
Depreciation | $ 325 | $ 444 | $ 968 | $ 1,200 |
Exit Activities - Narrative (De
Exit Activities - Narrative (Details) $ in Millions | Aug. 17, 2018store | Dec. 03, 2019store | Jan. 31, 2020store | Nov. 01, 2019USD ($) | Nov. 02, 2018USD ($)storelocation | Nov. 01, 2019USD ($) | Nov. 02, 2018USD ($)storelocation | Oct. 31, 2018store |
Canada Restructuring | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Costs incurred | $ | $ 53 | $ 53 | ||||||
Orchard Supply Hardware | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Costs incurred | $ | $ 123 | $ 353 | ||||||
Number of stores to be closed | 99 | |||||||
Strategic Reassessment Closures | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Costs incurred | $ | $ 121 | $ 121 | ||||||
Expected number of stores to be closed in the U.S. | 20 | 20 | 20 | |||||
Expected number of locations expected to be closed in Canada | 31 | 31 | 31 | |||||
Expected number of stores expected to be closed in Canada | 27 | 27 | 27 | |||||
Subsequent Event | Canada Restructuring | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Number of stores to be closed | 34 | 34 |
Exit Activities - Summary (Deta
Exit Activities - Summary (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Canada Restructuring | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | $ 53 | $ 53 | ||
Cumulative Amount | 53 | 53 | ||
Canada Restructuring | Long-lived asset impairments | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 53 | 53 | ||
Cumulative Amount | 53 | 53 | ||
Orchard Supply Hardware | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | $ 123 | $ 353 | ||
Cumulative Amount | 561 | 561 | ||
Orchard Supply Hardware | Long-lived asset impairments | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 0 | 206 | ||
Cumulative Amount | 206 | 206 | ||
Orchard Supply Hardware | Accelerated Depreciation And Amortization | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 103 | 103 | ||
Cumulative Amount | 103 | 103 | ||
Orchard Supply Hardware | Discontinued Project Write-Offs | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 0 | 24 | ||
Cumulative Amount | 24 | 24 | ||
Orchard Supply Hardware | Employee Severance | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 11 | 11 | ||
Cumulative Amount | 11 | 11 | ||
Orchard Supply Hardware | Contract Termination | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 9 | 9 | ||
Cumulative Amount | 217 | 217 | ||
Strategic Reassessment Closures | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 121 | 121 | ||
Cumulative Amount | 271 | 271 | ||
Strategic Reassessment Closures | Long-lived asset impairments | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 90 | 90 | ||
Cumulative Amount | 90 | 90 | ||
Strategic Reassessment Closures | Accelerated Depreciation And Amortization | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 0 | 0 | ||
Cumulative Amount | 50 | 50 | ||
Strategic Reassessment Closures | Discontinued Project Write-Offs | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 10 | 10 | ||
Cumulative Amount | 10 | 10 | ||
Strategic Reassessment Closures | Employee Severance | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 21 | 21 | ||
Cumulative Amount | 32 | 32 | ||
Strategic Reassessment Closures | Contract Termination | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 0 | 0 | ||
Cumulative Amount | 89 | 89 | ||
Exit Of Non-Core Activities | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 14 | 14 | ||
Cumulative Amount | 59 | 59 | ||
Exit Of Non-Core Activities | Long-lived asset impairments | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 9 | 9 | ||
Cumulative Amount | 9 | 9 | ||
Exit Of Non-Core Activities | Employee Severance | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 0 | 0 | ||
Cumulative Amount | 16 | 16 | ||
Exit Of Non-Core Activities | Inventory Lower Or Cost Or Market Adjustments | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 5 | 5 | ||
Cumulative Amount | 7 | 7 | ||
Exit Of Non-Core Activities | Other Restructuring | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 0 | 0 | ||
Cumulative Amount | 27 | 27 | ||
Mexico Retail Operations | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | 22 | 22 | ||
Cumulative Amount | 244 | 244 | ||
Mexico Retail Operations | Long-lived asset impairments | ||||
Restructuring Cost and Reserve | ||||
Costs Incurred | $ 22 | $ 22 | ||
Cumulative Amount | $ 244 | $ 244 |
Long-Term Debt - Summary (Detai
Long-Term Debt - Summary (Details) | May 03, 2019USD ($) |
Long-Term Debt | |
Unsecured notes, issued | $ 3,000,000,000 |
Unsecured Notes, 3.650% | |
Long-Term Debt | |
Unsecured notes, issued | $ 1,500,000,000 |
Unsecured notes, interest rate | 3.65% |
Unamortized discount | $ 9,000,000 |
Unsecured Notes, 4.550% | |
Long-Term Debt | |
Unsecured notes, issued | $ 1,500,000,000 |
Unsecured notes, interest rate | 4.55% |
Unamortized discount | $ 19,000,000 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | 9 Months Ended |
Nov. 01, 2019 | |
2019 Combined Notes | |
Long-Term Debt | |
Debt instrument, redemption price, percentage | 101.00% |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) | Sep. 01, 2019 | Nov. 01, 2019 | Sep. 30, 2019 | Feb. 01, 2019 | Nov. 02, 2018 |
Short-term Debt [Line Items] | |||||
Short-term borrowings | $ 637,000,000 | $ 722,000,000 | $ 0 | ||
Line of Credit | Three Hundred, Sixty-Four Day Credit Agreement | |||||
Short-term Debt [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 250,000,000 | ||||
Revolving Credit Facility | Second Amended And Restated Credit Agreement | |||||
Short-term Debt [Line Items] | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,980,000,000 | ||||
Debt Instrument, Term | 5 years | ||||
Commercial Paper | |||||
Short-term Debt [Line Items] | |||||
Short-term borrowings | $ 637,000,000 | $ 0 | |||
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 1.97% |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) shares in Millions | Nov. 01, 2019 | Aug. 31, 2019 | May 31, 2019 | May 31, 2019 | Mar. 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | Dec. 12, 2018 | Jan. 26, 2018 |
Share Repurchases | |||||||||||||
Cash used to repurchase shares | $ 3,649,000,000 | $ 2,498,000,000 | |||||||||||
Repurchase of common stock (in shares) | 7.9 | 5.9 | 35.6 | 26.2 | |||||||||
Share repurchases, value | $ 858,000,000 | $ 645,000,000 | $ 3,654,000,000 | $ 2,508,000,000 | |||||||||
Share repurchase program | |||||||||||||
Share Repurchases | |||||||||||||
Remaining share repurchases authorization, value | $ 10,300,000,000 | $ 10,300,000,000 | $ 10,300,000,000 | ||||||||||
Repurchase of common stock (in shares) | 7.7 | 5.7 | 35.3 | 25.9 | |||||||||
Share repurchases, value | $ 835,000,000 | $ 620,000,000 | $ 3,618,000,000 | $ 2,470,000,000 | |||||||||
January 26, 2018 Share Repurchase Authorization | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 5,000,000,000 | ||||||||||||
December 2018 Share Repurchase Authorization | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 10,000,000,000 | ||||||||||||
Accelerated Share Repurchase | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 270,000,000 | ||||||||||||
Cash used to repurchase shares | $ 270,000,000 | ||||||||||||
Repurchase of common stock (in shares) | 0.3 | 2.6 | |||||||||||
Variable Notional Accelerated Share Repurchase Agreement | |||||||||||||
Share Repurchases | |||||||||||||
Cash used to repurchase shares | $ 350,000,000 | $ 500,000,000 | |||||||||||
Repurchase of common stock (in shares) | 0.3 | 2.9 | |||||||||||
Proceeds from (repurchase of) equity | $ 150,000,000 | ||||||||||||
Variable Notional Accelerated Share Repurchase Agreement | Minimum | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 350,000,000 | ||||||||||||
Variable Notional Accelerated Share Repurchase Agreement | Maximum | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | 500,000,000 | $ 500,000,000 | $ 500,000,000 | ||||||||||
May 2019 Accelerated Share Repurchase Agreement Purchases | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 1,400,000,000 | 1,400,000,000 | |||||||||||
Cash used to repurchase shares | $ 1,400,000,000 | ||||||||||||
Proceeds from (repurchase of) equity | $ 420,000,000 | ||||||||||||
Share repurchases (in shares) | 1 | 8.9 | |||||||||||
May 2019 Accelerated Share Repurchase Agreement Purchases | Minimum | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases, value | $ 990,000,000 | ||||||||||||
May 2019 Accelerated Share Repurchase Agreement Purchases | Maximum | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases, value | $ 1,400,000,000 | ||||||||||||
August 2019 Accelerated Share Repurchase Agreement Purchases | |||||||||||||
Share Repurchases | |||||||||||||
Cash used to repurchase shares | $ 500,000,000 | ||||||||||||
Proceeds from (repurchase of) equity | $ 103,000,000 | ||||||||||||
Share repurchases, value | $ 397,000,000 | ||||||||||||
Share repurchases (in shares) | 0.8 | 2.8 | |||||||||||
August 2019 Accelerated Share Repurchase Agreement Purchases | Minimum | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 350,000,000 | ||||||||||||
August 2019 Accelerated Share Repurchase Agreement Purchases | Maximum | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases authorized, value | $ 500,000,000 | ||||||||||||
Open Market Purchases | |||||||||||||
Share Repurchases | |||||||||||||
Share repurchases, value | $ 438,000,000 | $ 1,900,000,000 | |||||||||||
Share repurchases (in shares) | 4.1 | 18.1 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Share Repurchases | ||||
Share repurchases (in shares) | 7.9 | 5.9 | 35.6 | 26.2 |
Share repurchases, value | $ 858 | $ 645 | $ 3,654 | $ 2,508 |
Reduction in retained earnings | $ 827 | $ 603 | $ 3,489 | $ 2,325 |
Share repurchase program | ||||
Share Repurchases | ||||
Share repurchases (in shares) | 7.7 | 5.7 | 35.3 | 25.9 |
Share repurchases, value | $ 835 | $ 620 | $ 3,618 | $ 2,470 |
Shares withheld from employees | ||||
Share Repurchases | ||||
Share repurchases (in shares) | 0.2 | 0.2 | 0.3 | 0.3 |
Share repurchases, value | $ 23 | $ 25 | $ 36 | $ 38 |
Earnings Per Share - Summary (D
Earnings Per Share - Summary (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Basic earnings per common share: | ||||
Net earnings | $ 1,049 | $ 629 | $ 3,771 | $ 3,138 |
Less: Net earnings allocable to participating securities | (3) | (1) | (11) | (10) |
Net earnings allocable to common shares, basic | $ 1,046 | $ 628 | $ 3,760 | $ 3,128 |
Weighted-average common shares outstanding (in shares) | 769 | 806 | 782 | 815 |
Basic earnings per common share (in dollars per share) | $ 1.36 | $ 0.78 | $ 4.81 | $ 3.84 |
Diluted earnings per common share: | ||||
Net earnings | $ 1,049 | $ 629 | $ 3,771 | $ 3,138 |
Less: Net earnings allocable to participating securities | (3) | (1) | (11) | (10) |
Net earnings allocable to common shares, diluted | $ 1,046 | $ 628 | $ 3,760 | $ 3,128 |
Weighted-average common shares outstanding (in shares) | 769 | 806 | 782 | 815 |
Dilutive effect of non-participating share-based awards (in shares) | 1 | 1 | 1 | 1 |
Weighted-average common shares, as adjusted (in shares) | 770 | 807 | 783 | 816 |
Diluted earnings per common share (in dollars per share) | $ 1.36 | $ 0.78 | $ 4.80 | $ 3.83 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Earnings Per Share | ||||
Anti-dilutive securities (in shares) | 0.9 | 0.2 | 0.9 | 0.4 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Income Taxes | ||||
Effective income tax rate | 24.00% | 21.80% | 22.20% | 23.80% |
Supplemental Disclosure - Net I
Supplemental Disclosure - Net Interest Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 01, 2019 | Nov. 02, 2018 | Nov. 01, 2019 | Nov. 02, 2018 | |
Net interest expense | ||||
Long-term debt | $ 171 | $ 145 | $ 498 | $ 437 |
Finance lease obligations | 7 | 0 | 21 | 0 |
Capitalized lease obligations | 0 | 15 | 0 | 44 |
Interest income | (5) | (9) | (24) | (21) |
Interest capitalized | 0 | 0 | (1) | (2) |
Interest on tax uncertainties | 0 | 0 | (2) | 0 |
Other | 4 | 2 | 16 | 9 |
Interest - net | $ 177 | $ 153 | $ 508 | $ 467 |
Supplemental Disclosure - Cash
Supplemental Disclosure - Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Nov. 01, 2019 | Nov. 02, 2018 | |
Supplemental disclosures of cash flow information | ||
Cash paid for interest, net of amount capitalized | $ 647 | $ 555 |
Cash paid for income taxes - net | 1,029 | 1,069 |
Non-cash investing and financing activities: | ||
Non-cash property acquisitions | 251 | 42 |
Cash dividends declared but not paid | $ 423 | $ 387 |
Subsequent Events (Details)
Subsequent Events (Details) - Canada Restructuring - Subsequent Event $ in Millions | 1 Months Ended | 3 Months Ended | |
Dec. 03, 2019store | Jan. 31, 2020store | Dec. 02, 2019USD ($) | |
Subsequent Event [Line Items] | |||
Number of stores to be closed | store | 34 | 34 | |
Minimum | |||
Subsequent Event [Line Items] | |||
Expected cost remaining | $ 175 | ||
Maximum | |||
Subsequent Event [Line Items] | |||
Expected cost remaining | $ 225 |