What changed in this filing

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Item 1. Business

2023-03-27 compared with 2022-03-21 · 170 added, 200 removed, 54 unchanged (87% of the section changed)

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and subsidiaries (the Company or Lowe’s) is a Fortune ® 50 company and the world’s second largest home improvement retailer.

As of January 28, 2022, Lowe’s operated 1,971 home improvement and hardware stores, representing approximately 208 million square feet of retail selling space.

These operations included 1,737 stores located across 50 U.S.

states, as well as 234 stores in Canada.

The Canadian stores include RONA inc.

(RONA), which was acquired by Lowe’s in 2016.

RONA operates 173 stores in Canada as of January 28, 2022, as well as services 226 dealer-owned stores.

The RONA stores represent complementary store formats operating under various banners.

As of February 3, 2023, Lowe’s operated 1,738 home improvement stores in the United States, representing approximately 195 million square feet of retail selling space.

On February 3, 2023, Lowe’s completed the sale of its Canadian retail business, which operated 232 stores in Canada, as well as serviced 210 dealer-owned stores.

The Canadian retail business included a number of complementary formats under the banners of RONA, Lowe’s Canada, Réno-Dépôt, and Dick’s Lumber.

See Note 7 of the Notes to Consolidated Financial Statements included in Item 8 , “Financial Statements and Supplementary Data”, of this Annual Report for information on this divestiture.

Lowe’s was founded in 1921 with the opening of its first hardware store in North Wilkesboro, North Carolina.

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For additional information about the Company’s performance and financial condition, see Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report.

Customers, Market and Competition

Our Customers

We serve homeowners, renters, and professional customers (Pro customers).

Individual homeowners and renters complete a wide array of projects and vary along the spectrum of do-it-yourself (DIY) and do-it-for-me (DIFM).

The Pro customer consists of two broad categories:

construction trades and maintenance, repair and operations.

market remains our predominant market, accounting for approximately 94% of consolidated sales for the fiscal year ended January 28, 2022.

The market in which we operate includes home-related sales through a variety of types of businesses.

This includes home centers, paint stores, hardware stores, lumber yards and garden centers, mass retailers, home goods specialty stores, and online retailers, as well as wholesalers that provide home-related products and services to homeowners, renters, businesses, and the government.

Lowe’s is an omnichannel retailer whose core priorities are to provide an excellent customer experience, create a great place to work for our associates, and improve our communities, which we believe will create long-term, sustainable value for our shareholders.

In 2020, we implemented our Total Home strategy, which reflects our commitment to provide a full complement of products and services for professional customers (Pro customers) and consumers alike, enabling a Total Home solution for every project across the home.

Our Total Home strategy has the following five pillars:

online business

We continue to transform our Pro offerings to drive Pro penetration by expanding our Pro brands and product assortments, resetting the footprint of our stores to better serve Pro customers, and introducing our new MVPs Pro Rewards & Partnership Program TM this year, which further enhances our relationship with our Pro customers.

We are investing in our omnichannel retail capabilities to expand our online business.

We are increasing visibility to our installation services through improved signage throughout our stores and continuing to improve the customer experience for our services, which are provided by our network of independent installers or outsourced to our third-party model that sells, furnishes, and installs more complex projects.

Our expanding localization efforts better serve the product needs of the unique communities across the country.

Finally, we continue to elevate our product assortment to provide the right products at the right price to meet our customers’ needs.

Our Customers and Market

The home improvement market in which we operate is highly fragmented, serving Pro customers, individual homeowners, and renters completing a wide array of projects that vary along the spectrum of do-it-yourself (DIY) and do-it-for-me (DIFM).

The Pro customer consists of three broad categories:

tradespeople, repair and remodelers, and property managers.

market is our predominant market, accounting for approximately 95% of consolidated sales for the fiscal year ended February 3, 2023.

As of February 3, 2023, we completed the sale of our Canadian retail business and no longer operate in the Canada market, which accounted for approximately 5% of consolidated sales for the fiscal year ended February 3, 2023.

There are many variables that affect consumer demand for the home improvement products and services Lowe’s offers.

Key indicators we monitor include real disposable personal income, employment, home prices, housing turnover, and consumer mobility.

We also monitor demographic and societal trends that shape home improvement industry growth.

Key indicators we monitor include home price appreciation, age of the housing stock, real disposable personal income, and housing turnover.

We also monitor demographic and societal trends that shape home improvement industry growth, notably strong millennial household formation, consumer mobility, and the widespread adoption of remote work.

Our Competition

The home improvement industry includes a broad competitive landscape that continues to evolve.

Lowe’s competes with national and international home improvement warehouse chains and lumber yards in most of the markets we serve.

We also compete with traditional hardware, plumbing, electrical, home supply retailers, and maintenance and repair organizations.

In addition, we compete with general merchandise retailers, warehouse clubs, online retailers, other specialty retailers, providers of equipment and tool rental, as well as service providers that install home improvement products.

Lowe’s competes with national and regional home improvement warehouse chains and lumber yards in most of the markets we serve.

We also compete with traditional hardware, plumbing, electrical, home supply retailers, paint stores, lumber yards and garden centers, as well as maintenance and repair organizations.

In addition, we compete with general merchandise retailers, home goods specialty stores, warehouse clubs, online retailers, other specialty retailers, providers of equipment and tool rental, service providers that install home improvement products, and wholesalers that provide home-related products and services to homeowners, renters, business, and the government.

Location of stores, product assortment, product pricing, and customer service continue to be key competitive factors in our industry, while the evolution of technology and customer expectations also underscores the importance of omnichannel capabilities as a competitive factor.

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See further discussion of competition in Item 1A , “Risk Factors”, of this Annual Report.

Products and Services

Our products and services provide the retail and Pro customer a one-stop shop for a full complement of merchandise and services to complete home improvement, repair, maintenance, or construction projects, enabling a Total Home solution for every need in the home.

Our Omnichannel Capabilities

We are committed to meeting customer demand to shop however, whenever, and wherever they choose.

Our omnichannel capabilities allow our customers to move from channel to channel with simple and seamless transitions even within the same transaction.

For example, for many projects, more than half of our customers conduct research online before making an in-store purchase.

For purchases made on Lowes.com, customers may pick up their purchase in-store at the customer service desk, curbside, or from touchless lockers, or have their purchase delivered to their home or business.

In addition, flexible fulfillment options are available for in-store purchases and those made through the contact center.

Regardless of the channels through which customers choose to engage with us, we strive to provide them with a seamless experience across channels and an endless aisle of products, enabled by our flexible fulfillment capabilities.

Our ability to sell products in-store, online, on-site, or through our contact centers speaks to our leverage of our existing infrastructure with the omnichannel capabilities we continue to introduce.

Our 1,738 Lowe’s-branded home improvement stores in the United States are generally open seven days per week and average approximately 112,000 square feet of retail selling space, plus approximately 32,000 square feet of outdoor garden center selling space.

Our home improvement stores offer similar products and services, with certain variations based on localization, along with a dedicated team of knowledgeable and friendly front-line associates available to assist our customers.

We continue to develop and implement productivity tools to enhance the efficiency of our sales associates and to integrate our order management and fulfillment processes.

Our home improvement stores have Wi-Fi capabilities that provide customers with Internet access, making information available quickly to further simplify the shopping experience.

Through our websites and mobile applications, we seek to empower consumers by providing a 24/7 shopping experience, product information, customer ratings and reviews, buying guides, how-to videos, and other information.

These tools help consumers make more informed purchasing decisions and give them increased confidence to undertake home improvement projects.

We enable customers to choose from a variety of fulfillment options, including buying online and picking up in-store, curbside pick-up, truck delivery, and parcel shipment to their homes or businesses.

We also offer new virtual design services for paints, blinds, and flooring for our customers.

We have on-site specialists available for retail and Pro customers to assist them in selecting products and services for their projects.

Our Pro sales managers meet with Pro customers at their place of business or on a job site and leverage nearby stores and our distribution network to ensure we meet customer needs for products and resources.

In addition, our In-Home Sales program is available in the majority of our stores to discuss various exterior projects such as windows, doors, roofing, siding, and deck projects, whose characteristics lend themselves to an in-home consultative sales approach.

Contact Centers

Lowe’s operates contact centers in a virtual workplace.

These contact centers help Lowe’s enable an omnichannel customer experience by providing the ability to tender sales, assist with order management, coordinate deliveries, manage after-sale installations, and answer general customer questions via phone, mail, e-mail, live chat, and social media.

Product Selection

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We offer home improvement products in the following categories:

Appliances, Seasonal & Outdoor Living, Lawn & Garden, Lumber, Kitchens & Bath, Tools, Paint, Millwork, Hardware, Flooring, Rough Plumbing, Building Materials, Décor, Lighting, and Electrical.

Appliances, Seasonal & Outdoor Living, Lawn & Garden, Lumber, Kitchens & Bath, Tools, Paint, Millwork, Hardware, Flooring, Rough Plumbing, Building Materials, Décor, and Electrical.

A typical Lowe’s-branded home improvement store stocks approximately 40,000 items, with over two million additional items available through our online selling channels.

Our product assortments offered in-store are tailored to meet the needs of the local market.

See Note 17 of the Notes to Consolidated Financial Statements included in Item 8 , “Financial Statements and Supplementary Data”, of this Annual Report for historical revenues by product category for each of the last three fiscal years.

We are committed to offering a wide selection of national brand-name merchandise complemented by our selection of private brands.

We are committed to offering a wide selection of national brand-name merchandise complemented by our selection of high-value private brands.

In fiscal 2022, we extended our STAINMASTER ® brand to include additional flooring categories outside of carpet like laminate, vinyl, and tile.

At the end of the fiscal year, we introduced STAINMASTER ® paint as our first private paint brand.

In addition, we are dedicated to ensuring the products we sell are sourced in a socially responsible, efficient, and cost-effective manner.

National Brand-Name Merchandise

In many product categories, customers look for a familiar and trusted national brand to instill confidence in their purchase.

Lowe’s home improvement stores carry a wide selection of national brand-name merchandise such as GE ® , LG ® , Samsung ® , and Whirlpool ® appliances;

Sherwin-Williams ® and Valspar ® paints and stains;

LARSON ® windows and doors;

Pergo ® and SMARTCORE ® flooring;

CRAFTSMAN ® and DeWalt ® power tools;

Metabo ® pneumatic tools;

Weber ® and Char-Broil ® grills;

Owens Corning ® insulation and roofing;

GAF ® roofing;

Marshalltown ® masonry and concrete tools;

Husqvarna ® and EGO ® outdoor power equipment;

John Deere ® riding lawn mowers;

Scotts ® lawn care products, SharkBite ® plumbing products;

Smith ® water heaters;

Norton ® abrasives;

Eaton ® and Southwire ® electrical products and wire;

and many more.

Private Brands

Private brands are an important element of our overall portfolio, helping to increase customer loyalty, drive sales, create differentiation, and improve margin.

We have a strong private brand presence across core categories, including some of our most valuable brands such as:

Kobalt ® tools;

STAINMASTER ® carpets;

allen+roth ® , ORIGIN 21™, and Style Selections ® home décor products;

Severe Weather ® pressure treated lumber;

Project Source ® high-value project completers;

Holiday Living ® seasonal products;

Harbor Breeze ® ceiling fans;

Sta-Green ® lawn and garden products;

Moxie ® cleaning products;

Reliabilt ® doors, windows, and hardware;

and Utilitech ® lighting and electrical products.

We source our products from vendors worldwide and believe that alternative and competitive suppliers are available for virtually all of our products.

Whenever possible, we purchase directly from manufacturers to provide savings for customers and improve our gross margin.

To efficiently move products from our vendors to our stores and maintain in-stock levels, we own and operate distribution facilities that enable products to be received from vendors, stored and picked, or cross-docked, and then shipped to our retail locations or directly to customers.

These facilities include 15 regional distribution centers (RDC) and 15 flatbed distribution centers (FDC) in the United States.

To efficiently serve our stores and meet our customers’ expectations for fast fulfillment and delivery, we own and operate more than 100 supply chain facilities in our network.

These facilities include regional distribution centers (RDCs), flatbed distribution centers (FDCs), import distribution centers (IDCs), bulk distribution centers (BDCs), and cross-dock terminals (XDTs).

We also operate standalone fulfillment centers, which along with many of our stores, ship product directly to our customers.

In addition, we are establishing a Pro fulfillment network across the country which will leverage a combination of our existing supply chain as well as new facilities, including our first Pro fulfillment center that opened this year.

Each one of these distribution nodes plays a critical role in our Total Home strategy, and collectively, enable our products to get to their destination as efficiently as possible.

The FDCs distribute merchandise that requires special handling due to size or type of packaging such as lumber, boards, panel products, pipe, siding, ladders, and building materials.

On average, each RDC and FDC serves approximately 115 stores.

We also own and operate seven distribution centers, including four lumber yards, to serve our Canadian market.

In addition to the RDCs and FDCs, we also operate coastal holding and transload facilities (CHF) to handle import product, bulk distribution centers (BDC) to handle appliances and other big and bulky product, cross-dock delivery terminals (XDT) to fulfill final mile box truck deliveries, and fulfillment centers (FC) focused on parcel post eligible products.

As part of our market-based delivery model, we added three XDT ecosystems (consisting of six new XDTs) in fiscal 2021.

We also enhanced our distribution network by opening four BDCs, three FCs, and two CHFs.

Collectively, our facilities enable our import and e-commerce products to get to their destination as efficiently as possible.

Most parcel-eligible items can be ordered by a customer and delivered within two business days at standard shipping rates.

In fiscal 2021, approximately 65% of the total dollar amount of merchandise we purchased flowed through our distribution network, while the remaining portion was shipped directly to our stores or customers directly from our vendors.

Our Pro fulfillment network stocks deeper quantities of our top Pro assortments and has expanded capabilities to handle large orders on multiple flat beds.

Our IDCs were expanded to create more capacity to hold import product at the coast, which improves our network’s agility to move inventory where and when it is needed.

Our BDCs handle appliances and other big and bulky product, and our XDTs fulfill final mile box truck deliveries of these products.

Our supply chain supports every pillar of our Total Home strategy, and as such, we continue to invest and transform our network to unlock our omnichannel capabilities while keeping our organization’s sustainability goals top of mind.

As part of the continued rollout of our market-based delivery model, we expanded to additional geographic areas and enhanced our distribution capacity for big and bulky product.

To date, we have 11 geographic areas converted to our market-based delivery model.

We have also been focused on improving the speed of our delivery capabilities for our customers.

As of fiscal year 2022, most parcel-eligible items can be ordered by a customer and delivered within two business days at standard shipping rates.

Also, the nationwide expansion of our gig networks provides same-day delivery of certain products from our stores.

Customer needs and buying patterns are constantly changing, and our supply chain will continue to evolve to meet their needs.

We are building an omnichannel supply chain that operates with greater network capacity, better flow management and optimization.

Installed Sales

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Lowe’s Protection Plans and Repair Services

We offer extended protection plans for various products within the Appliances, Kitchens & Bath, Décor, Millwork, Rough Plumbing, Electrical, Seasonal & Outdoor Living, Tools, and Hardware categories.

These protection plans provide customers with product protection that enhances or extends coverage offered by the manufacturer’s warranty and provides additional customer-friendly benefits that go beyond the scope of a manufacturer’s warranty.

The protection plans provide in-warranty benefits and out-of-warranty repair services for major appliances, outdoor power equipment, tools, grills, fireplaces, air conditioners, water heaters, and other eligible products through our stores or in the home through the Lowe’s Authorized Service Repair Network.

Our contact centers take customers’ calls, assesses the problems, and facilitates resolutions, making after-sales service easier for our customers by managing the entire process.

Selling Channels

We are continuing to enhance our omnichannel capabilities, which allows our customers to move from channel to channel with simple and seamless transitions even within the same transaction.

For example, for many projects, more than half of our customers conduct research online before making an in-store purchase.

For purchases made on Lowes.com, customers may pick up their purchase in-store at the customer service desk, curbside pick-up, or touchless lockers, or have their purchase delivered to their home or business.

In addition, flexible fulfillment options are available for in-store purchases and those made through the contact center.

Our 1,798 Lowe’s-branded home improvement stores, inclusive of 1,737 in the U.S.

and 61 in Canada, are generally open seven days per week and average approximately 112,000 square feet of retail selling space, plus approximately 32,000 square feet of outdoor garden center selling space.

The 173 RONA stores operate under various complementary store formats that address target customers and occasions.

Our home improvement stores in the U.S.

and Canada offer similar products and services, with certain variations based on localization.

We continue to develop and implement tools to make our sales associates more efficient and to integrate our order management and fulfillment processes.

Our home improvement stores have Wi-Fi capabilities that provide customers with Internet access, making information available quickly to further simplify the shopping experience.

These tools help consumers make more informed purchasing decisions and give them increased confidence to undertake home improvement projects.

We enable customers to choose from a variety of fulfillment options, including buying online and picking up in-store, curbside pick-up, truck delivery and parcel shipment to their homes or businesses.

We also offer a new virtual kitchen design service and virtual sales support for sheds, fencing, generators, and other project-related categories to allow our customers to shop how, when, and where they want for services projects.

We have on-site specialists available for retail and Pro customers to assist them in selecting products and services for their projects.

In addition, our In-Home Sales program is available in a majority of U.S.

Lowe’s home improvement stores to discuss varying exterior projects such as windows/doors, roofing, siding, and deck projects, whose characteristics lend themselves to an in-home consultative sales approach.

Contact Centers

Lowe’s operates three contact centers which are located in Wilkesboro, North Carolina;

Albuquerque, New Mexico;

and Indianapolis, Indiana.

These contact centers help Lowe’s enable an omnichannel customer experience by providing the ability to tender sales, coordinate deliveries, manage after-sale installations, facilitate repair services for Appliances and Outdoor Power Equipment, and answer general customer questions via phone, mail, e-mail, live chat, and social media.

Human Capital

When it comes to attracting and retaining top talent, Lowe’s strives to be an employer of choice.

We are committed to creating valuable career opportunities for our associates, supporting them and the communities where they live, and cultivating a culture that invites and encourages diverse opinions and ideas.

We enable associates to build meaningful careers that unlock their potential in an inclusive workplace as we work together to deliver the right home improvement products to our customers, with the best service and value, across every channel and community we serve.

As a testament to our commitments, in 2021 we received more than 15 notable employer of choice awards including being named:

a Disability:IN National Best Place to Work for Disability Inclusion, a Forbes America’s Best Large Employers, a Best of the Best 2021 Top Employer by Black EOE Journal, HISPANIC Network Magazine, and Professional Woman’s Magazine, and a Best Corporation for Veteran’s Business Enterprises of the Year.

As of January 28, 2022, Lowe’s employed approximately 200,000 full-time associates and 140,000 part-time associates, primarily in the United States, India, and Canada.

During the spring season, we temporarily expand our workforce by hiring associates in part-time, seasonal, and full-time positions to meet the elevated levels of demand.

Certain employees in Canada are subject to collective bargaining agreements.

No other employees are subject to collective bargaining agreements.

Management considers its relations with employees to be good.

Diversity and Inclusion

We believe that, by building diverse and inclusive teams, we drive better ideas, positive business results, and improve service through a deeper connection with our customers.

We continue to execute on our multi-year program to integrate diversity and inclusion initiatives into our corporate strategy across three areas:

talent, culture, and business.

In our efforts to foster an inclusive culture, we launched a new multigenerational business resource group (BRG) in 2021, building upon the seven existing associate-led BRGs that are sponsored by our executive leadership team.

We have also introduced badges for our store uniforms that identify the store associates who speak Spanish or American Sign Language.

In 2021, we held our ninth annual Women’s Leadership Summit, focused on developing women leaders across our corporate and field locations.

Also, in 2020, Lowe’s joined the OneTen coalition, which as a whole, the coalition has committed to hiring one million Black Americans in the next ten years.

Talent Development

We are committed to securing top talent and providing ongoing training and other developmental opportunities to facilitate meaningful careers at Lowe’s.

We enhanced our onboarding process so that new hires can quickly learn the skills needed for their position.

We offer a variety of leadership and development programs that develop skills and capabilities from product knowledge in our stores to advanced leadership principles for our leaders.

This year we expanded Lowe's University Academies offerings and included certification programs for store and technology associates that further develop their skills and knowledge base.

Additionally, through Lowe’s Track to the Trades program, we provide tuition reimbursement to our associates, encouraging them to complete apprentice certifications in carpentry, plumbing, electrical, heat, air ventilation and cooling (HVAC), or appliance repair.

Total Rewards and Wellness

In the spirit of building the best team and providing them with the best care, we are proud of the financial and well-being benefits we offer to our associates.

We have a strong track record of investing in our workforce by offering locally competitive salaries and wages.

We offer a wide variety of health, welfare, and financial benefits to our full-time and part-time associates, including health care and insurance benefits, retirement plans, an employee stock purchase plan, paid time off, leave programs and tuition assistance, among many others.

In response to the evolving coronavirus (COVID-19) pandemic, we continued to evolve our benefits and wellness programs to increase access to care.

We waived co-payments on pharmacy home deliveries, covered 100% of COVID-19 testing and vaccines, continued to operate our onsite clinics in a virtual care model, and launched a new virtual behavioral health app.

In partnership with CVS retail pharmacy and Premise onsite clinics, we launched a vaccine program, providing onsite access to

sites across the country.

In 2021, we continued to offer emergency paid leave for associates who are suffering from COVID-19.

Store and Workplace Safety

Our associates and customers drive our success.

Providing them a safe environment for both working and shopping is essential.

We strive to maintain a culture of safety, which begins with our leaders modeling the behaviors we want our associates to adopt.

We embed safety into associate onboarding, developmental e-learning and on-the-job training.

In response to the COVID-19 pandemic, we instituted rigorous safety standards in support of social distancing and enhanced sanitizing and cleaning.

Corporate Responsibility Report

Additional information regarding our activities related to our people and human capital strategy, as well as our workforce diversity data, can be found in our Corporate Responsibility Report and Culture, Diversity & Inclusion Report, which are published annually.

The contents of these reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.

We offer extended protection plans for certain products within the Appliances, Kitchens & Bath, Décor, Millwork, Rough Plumbing, Electrical, Seasonal & Outdoor Living, Tools, and Hardware categories.

These protection plans provide customers with product protection that enhances the coverage offered by the manufacturer’s warranty and provide additional benefits and repair services that extend beyond the manufacturer’s warranty.

Seasonality and Working Capital

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The name “Lowe’s” is a registered service mark of one of our wholly-owned subsidiaries.

We consider this mark and logo and the accompanying name recognition to be valuable to our business.

This subsidiary and other wholly-owned subsidiaries own and maintain various additional registered and unregistered trademarks, service marks and trade names, including retail names “RONA” and “Reno Depot”, and private brand product names “Kobalt”, “STAINMASTER” and “allen+roth”.

These subsidiaries also maintain various Internet domain names that are important to our business, and we also own registered and unregistered copyrights.

We consider this mark and logo and the accompanying goodwill and name recognition to be valuable to our business.

This subsidiary owns and maintains various additional registered and unregistered trademarks, service marks and trade names, including private brand product names, such as, “Kobalt”, “STAINMASTER” and “allen+roth.” This subsidiary also maintains various Internet domain names that are important to our business, and we also own registered and unregistered copyrights.

In addition, we maintain patent portfolios related to some of our products and services and seek to patent or otherwise protect certain innovations that we incorporate into our products, services, or business operations.

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We do not currently expect compliance with these laws and regulations to have a material effect on our capital expenditures, results of operations, and competitive position as compared to prior periods.

Sustainability

We have a proud history of managing our business responsibly and serving our associates and communities.

We continue to integrate sustainability topics and issues into our business, including focusing on product sustainability, our associates and communities, and reducing the environmental footprint of our operations, which we believe will help drive long-term shareholder value.

In addition to oversight by the full Board of Directors, the Board has also delegated primary responsibility for more frequent and in-depth oversight of the Company’s sustainability strategies and initiatives and reviewing the Company’s position on significant environmental and social issues to the sustainability committee of the Board of Directors.

In fiscal 2021, for the third consecutive year, Lowe’s was included in the Dow Jones Sustainability North America Index based on our environmental, social, and governance practices.

Human Capital

When it comes to attracting and retaining top talent, Lowe’s strives to be the employer of choice in retail.

At Lowe’s we are committed to creating valuable career opportunities for our associates, supporting them and the communities where they live, and cultivating a culture that invites and encourages diverse opinions and ideas.

We are focused on ensuring our associates see Lowe’s as a “Home to Possibility” with good jobs, a sense of belonging, and a promising future.

As a testament to our commitments, in 2022 we received more than 15 notable employer of choice awards including being named:

a Disability:IN National Best Place to Work for Disability Inclusion, a Forbes America’s Best Large Employers, a Best of the Best 2022 Top Employer by Black EOE Journal, HISPANIC Network Magazine, and Professional Woman’s Magazine, and a Best Corporation for Veteran’s Business Enterprises of the Year.

As of February 3, 2023, Lowe’s employed approximately 182,000 full-time associates and 125,000 part-time associates, primarily in the United States and India.

During the spring season, we temporarily expand our workforce by hiring associates in part-time and full-time positions to meet the elevated levels of demand.

At Lowe’s, we continue to listen carefully to our associates, most notably through our annual engagement survey.

In 2022, more than 90% of our associates participated in our survey and that data is used to improve our associate experience.

Creating Good Jobs

We have a strong track record of investing in our workforce by offering locally competitive salaries and wages.

Since 2018, we have invested more than $3 billion in incremental wages and share-based compensation for our front-line associates, which included creating many new roles for our associates to grow into, inclusive of 1,600 new assistant manager positions and 10,000 department supervisor positions.

This fiscal year, we implemented $170 million in annual wage increases, effective December 2022, in addition to the profit-sharing and discretionary bonuses we awarded throughout the year.

In addition, we offer an array of health, welfare, and financial benefits to our full-time and part-time associates, including health care and insurance benefits, retirement plans, an employee stock purchase plan, paid time off, and leave programs, among many others.

We have implemented workforce management tools that enable us to offer various scheduling options to our full-time associates to foster an improved experience in balancing their work and life responsibilities.

This includes such options for a shortened workweek, consistent shifts, or consecutive days off.

Our focus on the associate experience begins at initial application.

The implementation of improved technology in the hiring process has simplified the experience for those looking to join Lowe’s and helped to drive the experience overall.

Once hired, associates now experience an improved onboarding to help them quickly learn the knowledge and skills required to be successful in their new roles.

This onboarding includes assigning dedicated mentors to help new hires through the learning process.

Providing a safe environment for both working and shopping is our highest priority at Lowe’s.

We strive to maintain a culture of safety, which begins with our leaders modeling the behaviors we want our associates to adopt.

We embed safety into associate onboarding, developmental e-learning and on-the-job training.

Sense of Belonging

We believe that, by building diverse and inclusive teams, we drive better ideas, positive business results, and improve service through a deeper connection with our customers.

We continue to execute on our multi-year program to integrate diversity and inclusion initiatives into our corporate strategy across three areas:

talent, culture, and business.

We continue to strive to attract diverse talent for leadership positions across our company.

In 2022, we held our tenth annual Women’s Leadership Summit, focused on developing women leaders across our corporate and field locations.

In our efforts to foster an inclusive culture, we have eight business resource groups that are sponsored by our executive team.

These groups provide our associates with opportunities to collaborate, network, and learn together, and offer additional spaces where associates feel heard and can engage with other colleagues across the organization.

We also recognize the importance of strengthening our bonds with the diverse communities we serve.

We are one of the founding partners of the OneTen coalition, which committed to hiring one million Black Americans in the next ten years.

Promising Future

We are committed to securing top talent and providing ongoing training and other developmental opportunities to facilitate meaningful careers at Lowe’s.

We offer a variety of role-specific leadership and development programs that build and reinforce functional-technical/professional skills, business acumen, and leadership skills to prepare high-performing leaders for their next role.

Our focus on leadership development enables us to grow talent internally and has resulted in more than 80% of leadership positions being filled internally in the last year.

Additionally, nearly 90% of our store leaders have advanced to their current positions from hourly roles.

This year we expanded Lowe's University offerings to include the District Manager and Store Manager immersive week-long leadership experience programs, delivered from the Lowe’s University training center;

the virtual-delivered store department supervisor fundamentals series;

the virtual-delivered field supply chain leadership director, manager, and supervisor experience programs;

and the certification programs for store and technology associates that further develop their skills and knowledge base.

Additionally, through Lowe’s Track to the Trades program, we offer all Lowe’s associates the opportunity to enroll in programs to complete apprentice certifications in electrical, plumbing, HVAC, appliance repair, or multi-family maintenance.

The program also connects them with Pros to help them start a career in their area of interest.

The Track to the Trades program demonstrates Lowe’s commitment to our industry and the communities we serve.

This combined with our tuition-free education program are further examples of how we are investing in the future of our associates.

Corporate Responsibility

We take our role as a Fortune ® 50 retailer seriously by managing our business responsibly and focusing on serving our associates and the communities where we live and work.

We strive to integrate sustainability objectives into our business, particularly by focusing on the three pillars of our sustainability strategy:

our people and communities, product sustainability, and reducing the environmental footprint of our operations, which we believe will help drive long-term shareholder value.

In addition to oversight by the full Board of Directors, the Board has also delegated primary responsibility for more frequent and in-depth oversight of Lowe’s sustainability strategies and initiatives and reviewing our position on significant environmental and social issues to the sustainability committee of the Board of Directors.

In fiscal 2022, for the fourth consecutive year, Lowe’s was included in the Dow Jones Sustainability North America Index based on our ESG practices.

Investing in our Communities

We understand the important role Lowe’s plays in providing products, services, and support to our communities.

Through our community engagement initiatives and our continued partnerships with nonprofits across the nation, we are mending neighborhoods, revitalizing community spaces, supporting communities when disaster strikes, and preparing the next generation of skilled tradespeople to continue those efforts for years to come.

We carry out these initiatives with a special focus on our nation’s veterans and active military community, first-responders, and under-resourced communities.

In fiscal 2022, Lowe's announced a five-year, $100 million investment in the communities we serve through a new program called Lowe's Hometowns.

Each year from 2022 through 2026, Lowe's Hometowns will complete nearly 1,800 community impact projects, including 100 signature projects chosen from consumer nominations, and nearly 1,700 projects selected through Lowe's stores, supply chain facilities, and store support centers across the country.

Through this effort, Lowe’s is helping restore and revitalize spaces that serve as the hubs and heartbeats of communities, including neighborhood services, parks, and community centers.

In addition, throughout the year we partnered with dozens of nonprofit organizations to identify and respond to critical needs in local communities, including Building Homes for Heroes, Rebuilding Together, and Local Initiatives Support Corporation.

Lowe’s also continues to support our communities as they respond to and recover from natural disasters by providing tools and supplies, access to tool rental trailers, and volunteering with clean-up efforts.

In fiscal 2022, our associates across the U.S.

contributed nearly 170,000 volunteer hours through Lowe’s-sponsored community engagement activities as well as in their personal time.

In addition, through funding from our own associate donations and Company matching, we are able to support associates in times of significant, unforeseen financial hardship through the Lowe’s Employee Relief Fund.

Product Sustainability

We are committed to promoting sustainable practices throughout our supply chain and providing customers with eco-friendly, high quality, and safe products.

Our products undergo a thorough selection process, beginning with our sourcing decisions.

Through collaboration and established management systems, we monitor our suppliers’ practices to secure high-quality products from suppliers who support worker rights and protect the environment.

Lowe’s human rights policy supports the fundamental principles of human rights, as defined by the “Universal Declaration of Human Rights.” We continue to hold all suppliers to our rigorous standards through our human rights policy, our conflict minerals policy, and our Vendor Code of Conduct which includes enhanced environmental standards for all suppliers.

In addition, we have a wood sourcing policy that specifies that all wood products sold in our stores originate from well-managed, non-endangered forests.

As part of our commitment to reducing the environmental impact of our products, we continue to increase our offering of independently certified products that have validated environmental claims, reduce the usage of natural resources, and help customers decrease energy and water consumption.

We work with local and regional utilities to offer customers assorted rebates for a variety of environmentally efficient products including ENERGY STAR ® and WaterSense ® .

Reducing our Environmental Footprint

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Greenhouse Gas Emissions

By the end of 2022, we plan to announce a science based net-zero target.

The new target will include near and long-term greenhouse gas (GHG) emissions reduction goals for our full value chain.

In addition to reducing GHG emissions from our operations, the new target will also include reduction efforts for our supply chain and the products we sell.

We are committed to reducing our operational environmental footprint and have made significant investments in our facilities.

Over the past three years, we have spent more than $550 million across multiple projects including indoor LED upgrades, replacing stores’ aging HVAC units with high efficiency models, installing and updating building management systems, and installing pallet grinders.

We are a member of the Renewable Energy Buyers Alliance to evaluate and explore new opportunities and technologies across renewable energy markets.

Our renewable energy generation expanded in 2020 when 100 megawatts of wind energy became operational in central Texas through a power purchase agreement, and we have established a pipeline of other offsite renewable projects becoming operational over several years.

In addition, we are in the process of evaluating on-site solar generation and battery storage options in multiple states.

We are dedicated to promoting sustainable practices in the transportation industry, and we collaborate with the Environmental Protection Agency’s (EPA) SmartWay program to reduce transportation emissions by managing and reducing fuel usage by creating incentives for freight contractors to improve efficiency.

In December 2022, we announced our goal to reach net-zero emissions across the Company’s scope 1, 2, and 3 greenhouse gas emissions by 2050, in accordance with guidelines from the Science Based Targets initiative (SBTi), the global body enabling businesses to set emissions reduction targets in line with climate science.

To meet interim SBTi targets, Lowe’s has also committed to decreasing its scope 1 and scope 2 emissions by 40% and reducing scope 3 emissions by 22.5% below 2021 levels by 2030.

To reach these targets, Lowe’s will focus on increasing operational efficiency and working to reduce emissions across Lowe's entire value chain.

We are making further investments in energy efficiency and renewable energy within our operations, while exploring emerging technologies to reduce emissions associated with our vehicle fleet and facilities.

Over the past three years, we have spent nearly $500 million across multiple projects including indoor LED lighting upgrades, replacing stores’ aging HVAC units with high efficiency models, installing and updating building management systems, and installing pallet grinders.

Lowe’s is also focused on partnering with suppliers to help reduce upstream emissions.

We are working closely with suppliers to increase their operational efficiency and reduce their emissions through the use of renewable energy and low-carbon innovations.

Continuing to procure renewable energy is one way Lowe’s is working to reduce our emissions footprint.

In 2020, we secured our first renewable power purchase agreement, the Mesquite Star wind farm in Texas, now in its third year of operation.

That same year, we partnered with Swift Current Energy to source additional renewable energy from the Black Diamond Solar Project in Illinois, which is expected to become operational in the next few years.

We continue to establish a pipeline of other offsite renewable projects planned to become active over several years.

Lowe’s continues to be a member of the Clean Energy Buyers Association to evaluate and explore new opportunities and technologies across renewable energy markets (e.g., community solar, power purchase agreements), as well as implementing on-site solar generation in multiple states.

We are dedicated to promoting sustainable practices in the transportation industry, and we collaborate with the Environmental Protection Agency’s (EPA’s) SmartWay program to reduce transportation emissions by managing and reducing fuel usage by creating incentives for freight contractors to improve efficiency.

We are an EPA SmartWay program partner and aim for 100% SmartWay certification for our transportation providers.

in the future this will be a program requirement for all transportation providers along with annual recertification.

This program provides access to comprehensive data and oversight of Scope 3 emissions associated with our U.S.

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We partner with suppliers to improve recycling and waste diversion, develop regional management processes, measure waste streams, and conduct waste audits.

At a local level, store waste, including cardboard, broken appliances, wood pallets, and more, are recycled through national and regional partners, and we provide in-store recycling and reuse centers for our customers to bring in plastic planter pots, compact fluorescent lamp bulbs, plastic bags, and rechargeable batteries.

In fiscal 2021, we joined the How2Recycle partnership in an effort to educate customers and increase the likelihood of proper recycling of our product packaging.

At a local level, store waste, including cardboard, broken appliances, and wood pallets, is recycled through national and regional partners, and we provide in-store recycling and reuse centers for our customers to bring in plastic planter pots, compact fluorescent lamp bulbs, plastic bags, and rechargeable batteries.

In our second year collaborating with How2Recycle, we continue to educate customers and encourage proper recycling of our product packaging.

As technology and innovative practices improve, we will continue to explore opportunities to participate in the circular economy.

While our water consumption is modest compared with other industries, we continue to focus on reducing water consumption within our operations.

We use smart irrigation controllers for efficient watering at the majority of stores in the United States and have been exploring other water-efficient technologies to increase water savings in our stores and garden centers.

Additionally, we utilize leak detection technology to catch leaks as they occur to prevent unnecessary water use.

We use smart irrigation controllers for efficient watering at most stores and have been exploring other water-efficient technologies to increase water savings in our stores and garden centers.

Additionally, we use leak detection technology to catch leaks as they occur to prevent unnecessary water use.

We also have protocols in place to manage the disposal of chemicals to prevent release into waterways of the communities we serve.

Product Sustainability

We are committed to promoting sustainable practices throughout our supply chain and providing customers with high quality and safe products.

Our products undergo a thorough selection process, beginning with our sourcing decisions.

Through collaboration and established management systems, we monitor our suppliers’ practices to secure high-quality products from suppliers who support worker rights and protect the environment.

Lowe’s human rights policy, updated in fiscal 2021 to reflect our stance on modern slavery, supports the fundamental principles of Human Rights, as defined by the “Universal Declaration of Human Rights.” We continue to hold all suppliers to our rigorous standards through our human rights policy, our conflict minerals policy, and our Vendor Code of Conduct which includes enhanced environmental standards for all suppliers.

In addition, we have a wood sourcing policy that specifies that all wood products sold in our stores originate from well-managed, non-endangered forests.

We continue to work with local and regional utilities to offer customers assorted rebates for a variety of environmentally efficient products including ENERGY STAR® and WaterSense®.

Sustainability Reporting

Lowe’s participates in the CDP’s climate, forestry, and water security questionnaires to benchmark and quantify our environmental practices, to provide transparency on our progress, and assist in the reduction of our contributions to climate change.

In fiscal 2021, Lowe’s externally verified its Scope 1 and Scope 2 GHG emissions and water usage data to increase confidence in our reporting.

Additionally, we continued to align our sustainability reporting with the Sustainable Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the UN Sustainable Development Goals (SDGs).

Lowe’s published its first Task Force on Climate-related Financial Disclosures (TCFD) report in fiscal 2021 to assess our climate-related risks and opportunities and better understand the potential impacts on our value chain.

For more information about Lowe’s sustainability efforts, please visit responsibility.lowes.com .

Investing in Our Communities

We understand the important role Lowe’s plays in providing products, services, and support to communities in need.

As part of our goal to invest $350 million by 2025 in local communities, in 2021 we provided more than $100 million to these efforts, reinforcing our commitment to safe, affordable housing, investing in skilled trades education, and focusing on our unwavering support of rebuilding communities in the wake of natural disasters.

Lowe’s celebrated its centennial in 2021 by giving back through a new initiative, 100 Hometowns.

We launched the nationwide program to complete 100 impact projects to help communities rebuild from natural disasters, repair critical housing, restore community centers, revive green spaces, and more.

In total, more than 1.3 million people benefited from 100 Hometowns.

During the year, Lowe’s led or partnered on initiatives to build, repair, modify, and renovate individual homes and housing facilities that benefit families, front-line workers, veterans, seniors and communities in need.

As an NFL partner, we worked with leading national nonprofit organization Rebuilding Together in thirteen NFL team markets to fund and complete critical housing repairs for single-family homes owned by front-line workers impacted by COVID-19.

In support of the military and veterans community, we partnered with Building Homes for Heroes to fund and help complete the construction or modification of eleven mortgage-free homes for U.S.

veterans who were injured while serving in the military.

As areas of the U.S.

recovered from various natural disasters throughout the year, Lowe’s helped meet essential needs in impacted communities and supported relief efforts with the American Red Cross and Good360, a nonprofit leader in product philanthropy.

Store associates supported customers by handing out free, critically-needed supplies, providing mobile laundry and shower trailers, volunteering to work at stores most impacted by the storms, and deploying the new Lowe’s Tool Rental Disaster Response Trailer to help people get safely back into their homes and get their local businesses up and running.

Lowe’s also continued efforts to help close the skilled trades gap in the U.S.

with Generation T, a digital-first movement aimed at changing the way people see, learn and feel about the skilled trades.

Through various partnerships, we offered educational workshops, immersive experiences, and networking opportunities to students, transitioning military service members and their spouses.

In 2021, our associates across the U.S.

and Canada contributed nearly 196,000 volunteer hours in the communities where they live and work.

A major contributor to this goal is the work done through Lowe’s Heroes, a company-wide effort where we provide funding for each U.S.

and Canadian store to identify a project in their hometown that associates can support through volunteering.

The Lowe’s Employee Relief Fund, made possible through associate donations and company matching, supports associates in times of significant, unforeseen financial hardship.

In 2021, Lowe’s Employee Relief Fund distributed more than $4 million, helping 3,130 associates in need.

For more information on Lowe’s partnerships and latest community improvement projects, visit responsibility.lowes.com .

Corporate Responsibility Reporting

Lowe’s participates in the CDP’s climate change, forests, and water security questionnaires to benchmark and quantify our environmental practices, provide transparency on our progress, and assist in the reduction of our contributions to climate change.

Lowe’s continues to externally verify our scope 1 and scope 2 GHG emissions and water usage data to increase confidence in our reporting.

Additionally, we align our sustainability reporting with the Sustainable Accounting Standards Board, the Global Reporting Initiative, and the U.N.

Sustainable Development Goals.

We publish our annual Task Force on Climate-related Financial Disclosures report to assess our climate-related risks and opportunities and better understand the potential impacts on our value chain.

Additional information regarding our activities related to our human capital strategy, as well as our workforce diversity data, latest community improvement projects, and sustainability efforts can be found in our Corporate Responsibility Report and

Culture, Diversity & Inclusion Report, which are published annually and can be found on our website at responsibility.lowes.com .

The contents of these reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC.

Available Information

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What changed 10-K

Item 1. Business