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Lowes Income Statement Analysis

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Income Statement In the Income Statement sales decreased from 2014 to 2015 due to an issue with Lowes. Lowes had a delay in store openings due to construction delays by 1 year that delayed the shipment of products to those locations for the same time period. As such, $15MM in sales that would have been reported for sales in 2015 were instead recorded in 2016 and so inflated Sales Growth% and Gross Margin % for 2015-2016. And so analysis will be done both on the Midwest provided historical financials and also analyst adjusted historical financials with an additional $15MM in sales for 2015, and $15MM less sales in 2016. (See attached Income Statements) Sales • According to Midwest, sales grew $54,275M from $274,924M in 2015 to $329,199M …show more content…

Furthermore, this trend has continued since 2014 as EBITDA has fallen in both Midwest’s (down 420 basis points from 17.56% to 13.36%) and AIS (down 480 basis points from 17.56% to 12.75%). • Going forward, we would expect the 4 new products to mitigate the effect of these downward pressures as they are introduced, which have high margins (exceeding 45%), and as Midwest becomes more efficient with inventory management. Net Income • Midwest has Net Income dropping from 2014-2016, down from $26,746M to $24,719M respectively. AIS analysis follows the same trend as Net Income also fell from $26,746M to $21,805M over the same time period. The only difference stems from reassigning the $15MM from 2016 to 2015 resulting in a continual decrease in Net Income YOY vs an increase from 2015 to 2016 of $3,706M in Midwest’s analysis. • At the same time Net Margin has also decreased YOY for AIS down 272 basis points from 9.66% in 2014 t0 6.94% in 2016. In Midwest’s analysis they have a decrease of 215 basis points down from 9.66% to 7.51% over the same time period. • The decline in Net Income and Net Margin stems from the decrease in gross margins from competitors, along with big box

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