Lowe's (LOW) 10-K risk factor changes: FY2020 vs FY2019

You should read these risk factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in [Item [removed: 7](#s7C77936D13A951209C9B2FF63865C88D)] [added: 7](#i9842e66b35c94868bbc06decd778cbf4_49)] and our consolidated financial statements and related notes in [Item [removed: 8](#sDA86F660CCEB5055BB609F193FB7EF74).][added: 8](#i9842e66b35c94868bbc06decd778cbf4_94).]

Failure to identify such trends, adapt our business concept, [added: improve] and [added: maintain our stores and] implement change, growth, and productivity initiatives successfully could negatively affect our relationship with our customers, the demand for the home improvement products and services we sell, the rate of growth of our business, our market [removed: share] [added: share,] and results of operations.

The success of our strategic initiatives to adapt our business concept to our customers’ changing shopping habits and demands and changing demographics [added: have required us to and] will [added: continue to] require us to deliver large, complex programs requiring integrated planning, initiative prioritization and program sequencing.

These initiatives [added: have required and] will [added: continue to] require new competencies in many positions, and our management, employees and contractors [removed: will] have [added: had] to [added: and will need to continue to] adapt and learn new skills and capabilities.

[added: To the extent they are unable] or unwilling to make these transformational changes, we may be unable to realize the full benefits of our strategic initiatives and expand our relevant market access.

Failure to realize the benefits of amounts we invest in new technologies, products, or [added: services could result in the]

[removed: services could result in the] value of those investments being written down or written off.

[added: In addition, to support our strategic] initiatives and the related technology investments needed to implement our strategic investments, we must attract and retain a [added: large number of skilled professionals, including technology professionals.]

The market for these professionals is increasingly [added: competitive.]

Despite our continued vigilance and investment in information security, we, like others in our industry, are subject to the risk that unauthorized parties will attempt to gain access to our systems or our information through fraud or other means of deceiving our associates, third party providers, or vendors, and we or our third-party service providers cannot [removed: guarantee that we or they are able to adequately anticipate or prevent a future breach in our or their systems that results in the unauthorized access to, destruction, misuse or release of personal information or other sensitive data.]

[removed: Our] [added: Additionally, our] proprietary rights in our trademarks, trade names, service marks, domain names, copyrights, patents, trade secrets and other intellectual property rights are valuable assets of our business.

[removed: We may not be able to prevent or even] discover every instance of unauthorized third party uses of our intellectual property or dilution of our brand names, such as when a third party uses trademarks that are identical or similar to our own.

[removed: A challenge we face is attracting] [added: We may be unable to attract] and [removed: retaining] [added: retain] a sufficiently diverse workforce that can deliver relevant, culturally competent and differentiated experiences for a wide variety of culturally diverse customers.

Furthermore, our ability to meet our labor needs, particularly in a competitive labor market, while controlling our costs is subject to a variety of external factors, including [added: prevailing] wage rates, the availability of and competition for talent, health care and other benefit costs, our brand image and reputation, changing demographics and [added: the] adoption of new or revised [added: legislation or regulations governing] immigration, employment, [removed: and] labor [removed: laws] [added: relations, minimum wage] and [removed: regulations.][added: health care benefits.]

[removed: *Strategic transactions, such as our acquisition of RONA and Maintenance Supply Headquarters,] [added: *Our strategic transactions] involve risks, and we may not realize the expected benefits because of numerous uncertainties and risks.*

Additionally, any impairment of goodwill or other assets acquired or divested in a strategic transaction or charges to earnings associated with any [removed: strategic transaction, may materially reduce our earnings.]

*Our business could be affected by uncharacteristic or significant weather conditions, including natural [removed: disasters,] [added: disasters and changes in climate, which] could impact our operations.*

These types of events can also adversely affect our work force and [added: prevent associates and customers from reaching our stores and other facilities.]

[added: We face growing] competition from online and omni-channel retailers who have a similar product or service offering.

Our ability to be competitive on delivery times, delivery costs, and delivery options depends on many factors, including successful implementation [added: and the continued maintenance] of our initiatives related to supply chain transformation.

*If our domestic or international supply chain or our fulfillment network for our products is ineffective or disrupted for any reason, [added: including the COVID-19 pandemic,] or if these operations are subject to trade policy [removed: changes,] [added: changes or additional tariffs,] our results of operations could be adversely affected.*

[removed: While it is not possible to predict the long term impacts such changes may have, because we source a large percentage of our merchandise from outside the United States, future changes in] [added: It remains unclear how] tax or trade policies, tariffs or trade relations [added: may change under the new U.S. administration, which] could adversely affect our business, results of operations, effective income tax rate, liquidity and net income.

In addition, other countries may change their business and trade policies in anticipation of or in response to increased import tariffs and other changes in [removed: United States] [added: U.S.] trade policy and [removed: regulations.][added: regulations already enacted or that may be enacted in the future.]

The impact to our business, including net sales and gross margin, will be influenced in part by merchandising and pricing strategies in response to potential [removed: costs] [added: cost] increases by us and our competitors.

[removed: *Failure] [added: *Failures relating] to [removed: effectively manage] our third-party [added: installer program or by our third-party] installers could result in increased operational and legal risks and negatively impact our business, financial condition and results of operations.*

We [removed: use] [added: contract with] third-party installers to provide installation services to our customers, and, as the general contractor, we are subject to regulatory requirements and risks applicable to general contractors, including [removed: the management of the permitting,] [added: certain] licensing and [added: permitting requirements, and those relating to the quality and performance of our third-party installers.]

Our [removed: failure] [added: or our third-party installers’ failures] to effectively manage such [removed: requirements, the third-party installers,] [added: requirements] and [removed: our] internal processes regarding installation services could result in lost sales, fines and lawsuits, as well as damage to our reputation, which could negatively affect our business.

*Operating internationally presents unique challenges, including some that have required us to adapt our store operations, merchandising, marketing and distribution functions to serve customers in [removed: Canada.][added: Canada.* *Our business and results of operations could be negatively affected if we are unable to effectively address these challenges.*]

We are, and in the future will become, involved in lawsuits, [added: including consumer, commercial, employment, tort and other litigation,] regulatory inquiries, and governmental and other legal proceedings arising out of the ordinary course of our business.

*Liquidity and access to capital rely on efficient, rational and open capital markets and are dependent on Lowe’s credit [removed: strength.][added: strength.* *Our inability to access capital markets could negatively affect our business, financial performance and results of operations.*]

*Our sales are dependent upon the health and stability of the general [removed: economy.][added: economy.* *Adverse changes in economic factors specific to the home improvement industry may negatively impact the rate of growth of our total sales and comparable sales.*]

Competitive, Operational and Reputational Risks

Further, we have a store base that requires maintenance, investment and space reallocation initiatives to deliver the shopping experience that our customers desire.

Our capital investments in our stores may not deliver the relevant shopping experience our customers expect.

We may not be able to prevent or even

If we are unable to successfully protect our intellectual property rights, our business could be adversely affected.

Supply Chain and Third-Party Risks

Circumstances surrounding and related to the COVID-19 pandemic have created unprecedented impacts on the global supply chain.

Impacts related to the COVID-19 pandemic are placing strains on the domestic and international supply chain that may negatively affect the flow or availability of our products.

This can result in higher out-of-stock inventory positions due to difficulties in timely obtaining products from the manufacturers and suppliers of our products as well as transportation of those products to our distribution centers and stores, which could negatively affect our business and financial results.

Even if we are able to find alternate sources for such products, they may cost more, which could adversely impact our profitability and financial condition.

The changes in certain tax and trade policies, tariffs and other regulations affecting trade between the U.S. and other countries enacted under the prior U.S. administration increased the cost of our merchandise sourced from outside of the U.S., which represents a large percentage of our overall merchandise.

Technology and Cybersecurity Risks

guarantee that we or they are able to adequately anticipate or prevent a future breach in our or their systems that results in the unauthorized access to, destruction, misuse or release of personal information or other sensitive data.

For example, the California Consumer Privacy Act of 2018 grants California consumers certain rights over their personal information and imposes stringent requirements on the collection, use and sharing of “personal information” of California consumers.

Other U.S. states are proposing similar laws related to the protection of personal information and the U.S. federal government is also considering federal privacy legislation.

Investment-Related Risks

strategic transaction, may materially reduce our earnings.

Legal, Regulatory and Other External Risks

*The COVID-19 pandemic has affected and is expected to continue to affect our business, results of operations and financial condition.*

The effects of the COVID-19 pandemic are highly unpredictable and volatile, and have affected and are expected to continue to affect our business operations, demand for our products and services, our costs of doing business, availability of labor, access to inventory, supply chain operations, our ability to predict future performance, exposure to litigation, and our financial condition, among other things.

There is considerable uncertainty regarding the extent to which COVID-19 will continue to spread and the extent and duration of measures to try to contain the virus, such as travel restrictions, quarantines, “shelter-in-place” orders and various other restrictive measures.

At the onset of the pandemic, we implemented a number of measures to facilitate a safer store environment.

In addition, we provided expanded associate benefits to provide additional paid time off, special payments to hourly associates, temporary wage increases and other benefits.

These measures have increased our operating expenses.

Additionally, in response to the uncertainties surrounding the COVID-19 pandemic, we took proactive steps to further enhance our liquidity position by temporarily suspending our share repurchase program, which was later reinstated; increasing the capacity of our revolving credit facilities and the associated commercial paper program; as well as issuing senior notes in March 2020.

The extent to which the COVID-19 pandemic further impacts our business, results of operations and financial condition will depend on numerous evolving factors which are uncertain and cannot be predicted, including:

- the duration and scope of the pandemic and associated disruptions, including whether there are additional “waves” or other continued periods of increases or spikes in the number of COVID-19 cases, future mutations or related strains of the virus in areas where we or our suppliers operate;

- the effects of current and future governmental and public responses to changing conditions;

- evolving macroeconomic factors, including general economic uncertainty, unemployment rates and recessionary pressures;

- the financial condition and purchasing power of our customers;

- the ability of the third parties on which we rely, including our suppliers and other external business partners, to meet their obligations to the Company, or significant disruptions in their ability to do so which may be caused by their own financial or operational difficulties;

- unknown consequences on our business performance and strategic initiatives stemming from the substantial investment of time and other resources to the pandemic response;

- the availability of, and prevalence of access to, effective medical treatments and vaccines for COVID-19;

- volatility in the credit and financial markets during and after the pandemic;

- the pace of recovery when the pandemic subsides; and

- the long-term impact of the pandemic on our business, including consumer behaviors.

Any of the foregoing factors, or other effects of the COVID-19 pandemic or another pandemic, may result in adverse impacts to our business, results of operations and financial condition.

The impacts of the COVID-19 pandemic may also exacerbate other risks discussed herein.

Natural disasters, such as hurricanes and tropical storms, fires, floods, tornadoes, and earthquakes; unseasonable, or unexpected or extreme weather conditions, such as major or extended winter storms or droughts, whether as a result of climate change or otherwise; severe changes in climate; or similar disruptions and catastrophic events can affect consumer spending and confidence and consumers’ disposable income, particularly with respect to home improvement or construction projects, and could have an adverse effect on our financial performance.

*Our costs of doing business could increase as a result of changes in, expanded enforcement of, or adoption of new federal, state or local laws and regulations.*

To the extent they are unable

In addition, to support our strategic

large number of skilled professionals, including technology professionals.

competitive.

*We could be adversely affected by the failure to adequately protect and maintain our intellectual property rights or by claims of third parties that we infringe their intellectual property rights.*

We rely on a combination of trademark law, patent law, copyright law, trade secret protections and contractual arrangements, such as nondisclosure and confidentiality agreements, to protect our proprietary rights.

Maintenance and, when necessary, enforcement of our intellectual property rights require expenditure of financial and managerial resources, and despite our efforts, we may not always be able to effectively protect all such rights.

Additionally, our trade secrets are vulnerable to public disclosure by our own employees or as a result of a breach of or damage to our systems, which could result in theft of our proprietary property.

We may also be subject to intellectual property infringement lawsuits, brought by third parties against us claiming that our operations, products or services infringe third party rights (whether meritorious or not), including patent and trademark rights, which can be time consuming and costly to defend or settle and may cause significant diversion of management attention and result in substantial monetary damages, injunctive orders against us, unfavorable royalty-bearing licensing agreements or bad publicity.

In fact, in many of our stores, our employees must be able to serve customers whose primary language and cultural traditions are different from their own.

Natural disasters, such as hurricanes and tropical storms, fires, floods, tornadoes, and earthquakes; unseasonable, or

unexpected or extreme weather conditions; or similar disruptions and catastrophic events can affect consumer spending and

confidence and consumers’ disposable income, particularly with respect to home improvement or construction projects, and

could have an adverse effect on our financial performance.

prevent associates and customers from reaching our stores and other facilities.

We face growing

The current United States administration has enacted, and signaled the possibility of additional, changes in certain tax and trade policies, tariffs and other regulations affecting trade between the United States and other countries, such as the imposition of additional tariffs or duties on imported products and the exit or renegotiation of certain trade agreements and the rules of the World Trade Organization.

quality of our third-party installers.

Our business and results of operations could be negatively affected if we are unable to effectively address these challenges.*

*We must comply with various and multiple laws and regulations that differ substantially in each area where we operate.

Changes in existing or new laws and regulations or regulatory enforcement priorities, or our inability to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations.*

Laws and regulations at the local, regional, state, federal and international levels change frequently, and the changes can impose significant costs and other burdens of compliance on our business and our vendors.

If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to government enforcement action, litigation, damage to our reputation, civil and criminal liability, damages, fines and penalties and increased cost of regulatory compliance, any of which could adversely affect our results of operations and financial performance.

These laws, rules and regulations include, but are not limited to, import and export requirements, U.S. laws such as the Foreign Corrupt Practices Act and local laws prohibiting corrupt payments to governmental officials.

Although we have implemented policies and procedures to help ensure compliance with these laws, rules and regulations, there can be no certainty that our employees and third parties with whom we do business will not take actions in violation of our policies or laws.

Many of these laws, rules and regulations are complex, evolving and are subject to varying interpretations and enforcement actions.

Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation could have an adverse impact, directly or indirectly, on our financial condition and results of operations.

We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or which can result from increased scrutiny from a particular agency towards an industry, country or practice.

Our inability to access capital markets could negatively affect our business, financial performance and results of operations.*

Adverse changes in economic factors specific to the home improvement industry may negatively impact the rate of growth of our total sales and comparable sales.*

In addition, although we are monitoring the effects of a widespread outbreak of a contagious respiratory illness caused by a novel coronavirus first identified in Wuhan, China (COVID-19), we cannot predict whether, for how long, or the extent to which the outbreak may disrupt our supply chain, operations, sales, and/or product shipments and home installations.

A prolonged outbreak could negatively impact our vendors and customers, cause interruptions to our operations, including the reduction of store operating hours, temporary store closures and reduced store traffic, and adversely affect our results of operations.

More generally, a widespread health crisis could adversely affect the U.S. economy, resulting in an economic downturn that could decrease consumer confidence and affect demand for our products and therefore impact our results, including our business and financial outlook for fiscal 2020.

Any adverse impact on our results of operations, business or financial outlook could be material.

The following discussion and analysis summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and capital resources during the three-year period ended January [removed: 31, 2020] [added: 29, 2021] (our fiscal years [added: 2020,] 2019, [removed: 2018] and [removed: 2017).][added: 2018).]

Unless otherwise noted, all references herein for the years [added: 2020,] 2019, [removed: 2018] and [removed: 2017] [added: 2018] represent the fiscal years ended January [added: 29, 2021, January] 31, 2020, [removed: February 1, 2019] and February [removed: 2, 2018,] [added: 1, 2019,] respectively.

[removed: | • |] [added: -] [Executive [removed: Overview](#s448807FA14EF5038A284409D765EDCA5) |][added: Overview](#i9842e66b35c94868bbc06decd778cbf4_52)]

[removed: | • |] [added: -] [Financial Condition, Liquidity and Capital [removed: Resources](#sE1B083296140501EADD2D11AD28E049F) |][added: Resources](#i9842e66b35c94868bbc06decd778cbf4_73)]

[removed: | • |] [added: -] [Off-Balance Sheet [removed: Arrangements](#s5C62B7EDCC685AA4A3C462A39FC75CE0) |][added: Arrangements](#i9842e66b35c94868bbc06decd778cbf4_79)]

[removed: | • |] [added: -] [Contractual Obligations and Commercial [removed: Commitments](#s2D6F0B17E5AF5534A4DE972D150C13E2) |][added: Commitments](#i9842e66b35c94868bbc06decd778cbf4_82)]

[removed: | • |] [added: -] [Critical Accounting Policies and [removed: Estimates](#s79D2C335C72E505C93D04A9723D59F4B) |][added: Estimates](#i9842e66b35c94868bbc06decd778cbf4_85)]

Net sales for fiscal [removed: 2019] [added: 2020] increased [removed: 1.2%] [added: 24.2%] over fiscal year [removed: 2018] [added: 2019] to [removed: $72.1] [added: $89.6] billion.

The increase in total sales was driven by an increase in comparable sales, [added: primarily] offset by a decrease in sales due to closed [removed: stores and the exit of the Mexico and Orchard Supply Hardware (Orchard) businesses.][added: stores.]

Comparable sales increased [removed: 2.6%] [added: 26.1%] over fiscal year [removed: 2018,] [added: 2019,] driven by [removed: a comparable average ticket] [added: an] increase [added: in comparable transactions] of [removed: 2.1%] [added: 14.0%] and an increase in comparable [removed: transactions] [added: average ticket] of [removed: 0.5%.][added: 12.1%.]

Net earnings for fiscal [removed: 2019] [added: 2020] increased [removed: 85.0%] [added: 36.3%] to [removed: $4.3] [added: $5.8] billion.

Diluted earnings per common share increased [removed: 93.1%] [added: 41.3%] in fiscal year [removed: 2019] [added: 2020] to [removed: $5.49] [added: $7.75] from [removed: $2.84] [added: $5.49] in [removed: 2018.][added: 2019.]

Adjusting [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] amounts for [removed: certain significant] [added: these] discrete items not contemplated in the business outlooks for those respective years, adjusted diluted earnings per common share increased [removed: 12.3%] [added: 54.4%] in fiscal year [removed: 2019] [added: 2020] to [removed: $5.74] [added: $8.86] from [removed: $5.11] [added: $5.74] in [removed: 2018] [added: 2019] (see the [non-GAAP financial [removed: measures](#s9ED1B090F6185B58A0B5765D5F1BD426)] [added: measures](#i9842e66b35c94868bbc06decd778cbf4_61)] discussion).

For [removed: 2019,] [added: 2020,] cash flows from operating activities were [removed: approximately $4.3] [added: $11.0] billion, with [removed: $1.5] [added: $1.8] billion used for capital expenditures.

Continuing to deliver on our commitment to return excess cash to shareholders, the Company repurchased [removed: 41.0 million shares] [added: $5.0 billion] of [added: common] stock [removed: through the share repurchase program for $4.3 billion] and paid [removed: $1.6] [added: $1.7] billion in dividends during the year.

[removed: During] [added: - Prior to] the [removed: prior year, we] [added: beginning of fiscal 2019, the Company] announced [removed: our] [added: its] intention to exit [removed: our] [added: its] Mexico retail operations and [removed: our plan] [added: had planned] to sell the operating business.

However, [removed: during] [added: in] the first quarter of [added: fiscal] 2019, after an extensive market evaluation, the decision was made to instead sell the assets of the business.

Total [removed: pretax] [added: pre-tax] operating costs and charges [removed: associated with the strategic review of the Canadian operations] [added: for fiscal 2019] were $230 million [removed: for fiscal year 2019.][added: (Canada restructuring).]

| | | | | | [added: | | | | | | | | | |] Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Year | | | [added: | | |] Percentage Increase / (Decrease) in Dollar Amounts from Prior Year | | [added: |]

| | [added: | |] 2019 | | [added: | | | |] 2018 | | [added: | | | |] 2019 vs. 2018 | | | [added: | | |] 2019 vs. 2018 | | [added: |]

| Net sales | [removed: 100.00%] | | [removed: 100.00%] [added: 100.00] | | [added: % | | | | 100.00 | | % | | | |] N/A | | | [added: | | |] 1.2 | [added: |] % |

| Gross margin | [added: | |] 31.80 | | [added: | | | |] 32.12 | | [removed: (32] | [removed: )] | | [added: | (32) | | | | | |] 0.2 | | [added: |]

| Expenses: | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| Selling, general and administrative | [added: | |] 21.30 | | [added: | | | |] 24.41 | | [removed: (311] | [removed: )] | | [removed: (11.7] | [removed: )] [added: (311)] | [added: | | | | | (11.7) | | |]

| Depreciation and amortization | [added: | |] 1.75 | | [added: | | | |] 2.07 | | [removed: (32] | [removed: )] | | [removed: (14.5] | [removed: )] [added: (32)] | [added: | | | | | (14.5) | | |]

| Operating income | [added: | |] 8.75 | | [added: | | | |] 5.64 | | [added: | | | |] 311 | | | [added: | | |] 57.1 | | [added: |]

| Interest [removed: -] [added: –] net | [added: | |] 0.96 | | [added: | | | |] 0.88 | | [added: | | | |] 8 | | | [added: | | |] 10.6 | | [added: |]

| Pre-tax earnings | [added: | |] 7.79 | | [added: | | | |] 4.76 | | [added: | | | |] 303 | | | [added: | | |] 65.7 | | [added: |]

| Income tax provision | [added: | |] 1.86 | | [added: | | | |] 1.52 | | [added: | | | |] 34 | | | [added: | | |] 24.3 | | [added: |]

| Net earnings | [removed: 5.93%] | | [removed: 3.24%] [added: 5.93] | | [added: % | | | | 3.24 | | % | | | |] 269 | | | [added: | | |] 85.0 | [added: |] % |

| | | | | | [added: | | | | | | | | | |] Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Year | | | [added: | | |] Percentage Increase / (Decrease) in Dollar Amounts from Prior Year | | [added: |]

| Selling, general and administrative | [removed: 24.41] | | [removed: 21.04] [added: 20.68] | | [removed: 337] | | | [added: | 21.30 | | | | | | (62) | | | | | |] 20.6 | | [added: |]

| Loss on extinguishment of debt | [added: | | 1,060 | | | | | |] — | | [removed: 0.68] | | [removed: (68] | [removed: )] | [added: —] | [removed: (100.0] | [removed: )] |

| Other Metrics | [removed: 2019] | | [added: 2020] | | [removed: 2018] | | | | [removed: 2017] [added: 2019] | | | [added: | | | 2018 | | |]

| Comparable sales increase 1 | [removed: 2.6] | | [added: 26.1 | |] % | | [removed: 2.4] | | [added: 2.6 | |] % | | [removed: 4.0] | | [added: 2.2 | |] % |

| Total customer transactions (in millions) | [removed: 921] | | [added: 1,046] | | [removed: 941] | | | | [removed: 953] [added: 921] | | | [added: | | | 941 | | |]

| Average ticket 2 | [added: | |] $ | [removed: 78.36] [added: 85.67] | | | [added: | |] $ | [removed: 75.79] [added: 78.36] | | | [added: | |] $ | [removed: 72.00] [added: 75.79] | |

| At end of year: | | | | | | | | | | | | [added: | | | | | |]

| Number of stores | [removed: 1,977] | | [added: 1,974] | | [removed: 2,015] | | | | [removed: 2,152] [added: 1,977] | | | [added: | | | 2,015 | | |]

| Sales floor square feet (in millions) | [added: | |] 208 | | | | [removed: 209] | | [added: 208] | | [removed: 215] | | | [added: | 209 | | |]

- [Operations](#i9842e66b35c94868bbc06decd778cbf4_55)

*Performance Overview*

Included in the fiscal 2020 results is a $1.1 billion pre-tax loss on extinguishment of debt from cash tender offers to purchase and retire an aggregate principal amount of $3.0 billion in outstanding notes with a weighted average interest rate of 4.80%.

The Company funded the cash tender offers with a $4.0 billion issuance of unsecured notes with a weighted average interest rate of 2.17%.

These efforts took advantage of a favorable interest rate environment to reduce our long-term interest expense.

Also included in the results for fiscal 2020 and 2019 are operating costs related to the Canada restructuring actions.

In 2020, we experienced unprecedented customer demand as the consumer mindset turned its focus to the function and enjoyment of their home.

During the COVID-19 pandemic, the home has become a residence, a home school, a home office and the primary location for recreation and entertainment.

Due to our execution of the Company’s retail fundamentals strategy announced in 2018, which focused on merchandising excellence, supply chain transformation, operational efficiency, and customer engagement, we leveraged our improved operating capabilities to quickly respond to the global health crisis and meet customer demands.

The COVID-19 pandemic changed the way customers shop with Lowe’s.

In an effort to enhance our omni-channel capabilities and to offer options to meet our customer’s needs, we rapidly rolled out curbside pickup in the first quarter.

We then launched mobile check-in for curbside pickup along with an internal order picking app to improve associates’ speed and accuracy in fulfilling orders, and began the launch of touchless buy online pickup in store (BOPIS) lockers.

We also continue to enhance our mobile app to improve the customer pickup experience, including geofencing technology that alerts our stores when customers are on their way to pick up their orders.

In addition, we completed the re-platforming of Lowes.com to the cloud which greatly improved site stability and functionality allowing us to achieve triple-digit online sales growth for the year.

To provide customers with a more intuitive shopping experience and better align our product adjacencies, especially for Pro customers, we made a significant merchandising investment to reset the layout of our U.S. stores (U.S. Stores Reset).

The U.S. Stores Reset provides a faster shopping experience, increases localized product assortments by eliminating unproductive bays

which opens up space for new products better tailored to the local market, and drives more transactions by moving the basket-building category of cleaning products to the main power aisle of the store.

The Company incurred approximately $260 million of incremental expense in 2020, which is reflected within selling, general and administrative (SG&A) expenses in the consolidated statement of earnings, with approximately 95% of the resets complete as of the end of the fiscal year.

In addition, throughout 2020, we continued to focus on gaining market share with the Pro customer.

We continue to elevate our brand and product offerings in the job lot quantities they need.

During the fourth quarter, we launched our new Pro customer relationship management (CRM) tool which provides our Pro Desk with tools to manage, grow and retain our Pro customers through consistent and data-driven selling actions.

*COVID-19 Response*

We began the year focused on executing our retail strategy; however, we rapidly re-prioritized our objectives to address the impacts of COVID-19.

Our Company has been committed to the following priorities while navigating the COVID-19 pandemic:

1.Protecting the health and safety of our associates and customers through a safe store environment and shopping experience,

2.Financially supporting our associates during this challenging time, and

3.Providing support for our community, including healthcare providers and first responders.

We implemented a number of initiatives to facilitate a safer store environment throughout the year, including supporting social distancing by adding signage and floor markers, installing plexiglass shields at the point-of-sale areas, and designating social distancing ambassadors to monitor customer flow traffic; enhancing cleaning procedures; and adopted a requirement for all front-line associates to wear masks and a nationwide standard for all customers to wear masks.

For the year, we invested nearly $1.3 billion in COVID-related support for our associates, store safety and communities.

As part of our commitment to provide financial assistance to our associates, this investment was inclusive of $915 million of expense to support our associates, which included seven discretionary payments for our hourly associates, a $2 per hour temporary wage increase for hourly associates during the month of April, and emergency paid leave for all associates who needed it.

In addition, our support included $109 million in pandemic relief to support our communities, including grants to support minority-owned and rural small businesses.

*Looking Forward*

In late 2020, after a period of time spent focusing on improving our retail fundamentals, we unveiled our Total Home strategy, which is our commitment to providing a full complement of products and services for Pros and Consumers alike, enabling a Total Home solution for every need in the home.

We believe our Total Home strategy will enhance customer engagement and grow market share by intensifying our focus on the Pro customer, expanding our online business, modernizing installation services, improving localization efforts, and elevating our product assortment.

In the coming year, we remain focused on growing market share, improving operating profitability, and driving sustainable growth.

While there is uncertainty in the market and the home improvement sector, we believe we have the flexibility to manage and adapt our business in a dynamic economic environment.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2020 | | | | | | 2019 | | | | | | 2020 vs. 2019 | | | | | | 2020 vs. 2019 | | |

| Net sales | | | 100.00 | | % | | | | 100.00 | | % | | | | N/A | | | | | | 24.2 | | % |

| | |

| --- | --- |

| • | [Operations](#s0F62D5DA6E055DA59236D16F1429B8A4) |

As further discussed below, during fiscal year 2019, we completed a strategic review of the Canadian operations and finalized the closure of the Mexico business, resulting in net pre-tax operating costs and charges of $265 million, which decreased diluted earnings per share by $0.25.

This resulted in an $82 million tax benefit in the first quarter.

This benefit was partially offset by $35 million of pretax operating costs during the year associated with the exit and ongoing wind-down of the business.

In the third quarter of 2019, we commenced a strategic review of the Canadian operations to improve execution and deliver long-term improved profitability in Canada.

As a result, during the fourth quarter, we completed the closure of 28 under-performing stores with the remaining six planned closures to be completed in early fiscal 2020.

In addition, Canadian operations started a SKU rationalization project to present a more coordinated assortment of product to the customer across banners and began the reorganization of the corporate structure to more efficiently serve stores.

During the year, we made significant progress transforming our Company through our four key focus areas: driving merchandising excellence; transforming our supply chain; delivering operational efficiency; and intensifying customer engagement.

Our Merchandise Service Teams (MST) have improved our merchandising reset execution and day-to-day bay and end-cap maintenance at the store level to deliver a better shopping experience to our customers.

We made improvements to our store environment, optimizing our layout on the critically important seasonal pad at the front of our stores.

We also opened two new bulk distribution centers, relocated a third bulk distribution center, and opened four new cross-dock delivery terminals.

In 2019, we focused on improving our customer service and investing in our in-stock position, driving efficiency in our store operations and advancing our Pro service model.

We rolled out a customer centric scheduling system that allows us to provide better department coverage and customer service, while ensuring that we are using our payroll efficiently.

We have also added scheduling effectiveness tools that measure schedule efficiency and deployed new mobile devices to our store associates with

applications to help make our associates more efficient and ultimately allowed them to spend more time interacting with customers.

In 2019, our Pro strategy was primarily focused on improving retail fundamentals such as job lot quantities, improved service levels, dedicated loaders, Pro department supervisors and consistent volume pricing.

In addition, during the fourth quarter, we added dedicated point of sale terminals at our Pro desk to allow for more convenient, faster service.

In 2019, we made significant progress in transforming our company.

Although we are only one year into a multi-year transformation, we believe that we are on the right path to capitalize on demand in the home improvement market, and our planned improvements to the Lowes.com platform will allow these four strategic areas of focus to create a true omni-channel ecosystem for Lowe’s so we can efficiently serve our customers any way they choose to shop.

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2018 | | 2017 | | 2018 vs. 2017 | | | 2018 vs. 2017 | |

| Net sales | 100.00% | | 100.00% | | N/A | | | 3.9 | % |

| Gross margin | 32.12 | | 32.69 | | (57 | ) | | 2.1 | |

| Depreciation and amortization | 2.07 | | 2.05 | | 2 | | | 5.2 | |

| Operating income | 5.64 | | 9.60 | | (396 | ) | | (39.0 | ) |

| Interest - net | 0.88 | | 0.92 | | (4 | ) | | (1.3 | ) |

| Pre-tax earnings | 4.76 | | 8.00 | | (324 | ) | | (38.2 | ) |

| Income tax provision | 1.52 | | 2.98 | | (146 | ) | | (47.1 | ) |

| Net earnings | 3.24% | | 5.02% | | (178 | ) | | (32.9 | )% |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 1 | *A comparable location is defined as a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. The relocated location must then remain open longer than 13 months to be considered comparable. A location we have decided to exit is no longer considered comparable as of the beginning of the month in which we announce its exit. Acquired locations are included in the comparable sales calculation beginning in the first full month following the first anniversary of the date of the acquisition. Comparable sales include online sales, which positively impacted fiscal 2019, fiscal 2018 and fiscal 2017 by approximately 25 basis points, 80 basis points and 120 basis points, respectively.* |

Accordingly, these non-GAAP measures may not be comparable to the measures used by other companies.

For fiscal 2019, the Company has recognized financial impacts from the following discrete items, not contemplated in the Company’s Business Outlook for 2019:

| • | Prior to the beginning of fiscal 2019, the Company announced its intention to exit its Mexico retail operations and had planned to sell the operating business. However, in the first quarter of fiscal 2019, after an extensive market evaluation, the decision was made to instead sell the assets of the business. That decision resulted in an $82 million tax benefit in the first quarter, which was partially offset by $12 million of pre-tax operating costs associated with the exit and ongoing wind-down of the Mexico retail operations. During the second quarter of fiscal 2019, the Company recognized additional pre-tax operating losses of $14 million. For the third quarter, the pre-tax operating losses for the Mexico retail operations were insignificant. For the fourth quarter, the Company recognized additional pre-tax operating losses of $9 million. Total pre-tax operating costs and charges for fiscal year 2019 were $35 million (Mexico adjustments), and; |

| • | 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. During the fourth quarter, the Company made the decision to close 34 under-performing stores and take additional actions to improve future performance and profitability of its Canadian operations. As a result of these actions, in the fourth quarter of fiscal 2019, the Company recognized pre-tax operating costs and charges of $176 million, consisting of inventory liquidation, accelerated depreciation and amortization, severance, and other costs, as well as a net $26 million impact to income tax expense related to income tax valuation allowance. Total pre-tax operating costs and charges for fiscal year 2019 were $230 million (2019 Canada restructuring). |

During fiscal 2018, the Company recognized financial impacts from the following discrete items, not contemplated in the Company's Business Outlook for 2018:

The fair value of our derivative financial instruments as of January [removed: 31, 2020] [added: 29, 2021,] was not material.

We purchase certain commodity products that are subject to price volatility caused by factors beyond our [removed: control.][added: control, which could potentially have a material impact on our financial condition and/or results of operations.]

The selling prices of these commodity products are influenced, in part, by the market price we [removed: pay, which is determined by industry supply] [added: pay] and [removed: demand.][added: our competitive environment.]

We do not believe that changing prices for commodities due to inflation or deflation have had a material effect on our net sales or results of operations.

As of January [removed: 31, 2020,] [added: 29, 2021,] Lowe’s operated [removed: 1,977] [added: 1,974] home improvement and hardware stores, representing approximately 208 million square feet of retail selling space.

These operations included [removed: 1,728] [added: 1,734] stores located across 50 U.S. states, as well as [removed: 249] [added: 240] stores in Canada.

The Canadian stores include RONA inc. [removed: (RONA)] [added: (RONA),] which was acquired by Lowe’s in 2016.

RONA operates [removed: 185] [added: 179] stores in Canada as of January [removed: 31, 2020,] [added: 29, 2021,] as well as services approximately [removed: 237] [added: 231] dealer-owned stores.

The RONA stores represent [removed: various] complementary store formats operating under various banners.

See [Item [removed: 6](#sEEE4A64BCE2952EC91FE6672E6E1C3B8),] [added: 6](#i9842e66b35c94868bbc06decd778cbf4_46),] “Selected Financial Data”, of this Annual Report on Form 10-K (Annual Report), for historical revenues, profits and identifiable assets.

For additional information about the Company’s performance and financial condition, see also [Item [removed: 7](#s7C77936D13A951209C9B2FF63865C88D),] [added: 7](#i9842e66b35c94868bbc06decd778cbf4_49),] “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report.

The Pro customer consists of two broad categories: construction [removed: trades;] [added: trades] and maintenance, repair & operations.

The U.S. market remains our predominant market, accounting for approximately [removed: 93%] [added: 94%] of consolidated sales for the fiscal year ended January [removed: 31, 2020.][added: 29, 2021.]

Key indicators we monitor include real disposable personal income, employment, home prices, [removed: and] housing [removed: turnover.][added: turnover, and consumer mobility.]

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

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 [added: expectations also underscores the importance of omni-channel capabilities as a competitive factor.]

To ensure ongoing competitiveness, Lowe’s focuses on delivering the right home improvement products, with the best service and [removed: value, across every channel and community we serve.]

See further discussion of competition in [Item [removed: 1A](#sFB3427BA35E15EDAB5DBA7A175831645),] [added: 1A](#i9842e66b35c94868bbc06decd778cbf4_22),] “Risk Factors”, of this Annual Report.

We offer home improvement products in the following categories: Appliances, [removed: Décor, Paint, Hardware, Millwork,] [added: Seasonal & Outdoor Living,] Lawn & Garden, [removed: Lighting, Lumber & Building Materials, Flooring,] [added: Lumber,] Kitchens & Bath, [added: Tools, Paint, Millwork, Hardware, Flooring,] Rough [removed: Plumbing & Electrical, Seasonal & Outdoor Living,] [added: Plumbing, Building Materials, Décor, Lighting,] and [removed: Tools.][added: Electrical.]

A typical Lowe’s-branded home improvement store stocks approximately [removed: 35,000] [added: 40,000] items, with [removed: hundreds of thousands of] [added: over two million] additional items available through our [removed: Special Order Sales system and various] online selling channels.

See [removed: [Note](#s59DE1DBDF6DD5B9E9DF7AF1A02040E36) 18] [added: [Note 17](#i9842e66b35c94868bbc06decd778cbf4_208)] of the Notes to Consolidated Financial Statements included in [removed: Item 8,] [added: [Item 8](#i9842e66b35c94868bbc06decd778cbf4_94),] “Financial Statements and Supplementary Data”, of this Annual Report for historical revenues by product category for each of the last three fiscal years.

Lowe’s home improvement stores carry a wide selection of national brand-name merchandise such as Whirlpool®, GE®, LG®, and Samsung® appliances, Stainmaster® carpets, Sherwin-Williams® and Valspar® paints and stains, Pella® windows and doors, Pergo® hardwood flooring, [added: CRAFTSMAN® and] DeWALT® power tools, Metabo® pneumatic tools, Weber® and Char-Broil® grills, Owens Corning® insulation and roofing, GAF® roofing, James Hardie® fiber cement siding, Marshalltown® masonry tools and concrete, [removed: Husqvarna®] [added: Husqvarna®, EGO® and SKIL®] outdoor power equipment, John Deere® riding lawn mowers, Werner® ladders, Quoizel® lighting, Nest® products, SharkBite® plumbing products, A. O. Smith® water heaters, Norton® abrasives, [added: Simpson Strong-Tie® connectors, Eaton® electrical products,] and many more.

We have a strong private brand presence across core categories, including some of our most valuable brands such as: Kobalt® [removed: tools,] [added: tools;] allen+roth® [added: and Style Selections®] home décor [removed: products,] [added: products; Severe Weather® pressure treated lumber;] Project Source® high-value project [removed: completers,] [added: completers;] Holiday Living® seasonal [removed: products,] [added: products;] Harbor Breeze® ceiling [removed: fans,] [added: fans;] Sta-Green® lawn and garden [removed: products,] [added: products;] Moxie® cleaning [removed: products,] [added: products;] Reliabilt® doors, windows, and [removed: hardware,] [added: hardware;] and Utilitech® electrical and utility products.

In addition to the RDCs and FDCs, we also operate coastal holding and transload facilities 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 [removed: a direct] fulfillment [removed: center] [added: centers (FC)] focused on parcel post eligible products.

In fiscal [removed: 2019,] [added: 2020,] we enhanced our distribution network by adding [removed: four XDTs and] [added: thirteen XDTs,] two BDCs, [removed: in addition to relocating] [added: and] one [removed: BDC.][added: FC.]

Collectively, our facilities enable our import and [removed: e-commerce, as well as parcel post eligible products,] [added: e-commerce products] to get to their destination as efficiently as possible.

Most [removed: parcel post] [added: parcel-eligible] items can be ordered by a customer and delivered within two business days at standard shipping rates.

In fiscal [removed: 2019, on average,] [added: 2020,] approximately [removed: 75%] [added: 67%] of the total dollar amount of merchandise we purchased [removed: was shipped] [added: flowed] through our distribution network, while the remaining portion was shipped directly to our stores from vendors.

We offer installation services through independent contractors in many of our product categories, with Appliances, Flooring, Kitchens & Bath, [removed: Lumber &] [added: Lumber,] Building Materials, and Millwork accounting for the majority of installed sales.

Installed Sales, which includes both product and labor, accounted for approximately [removed: 6%] [added: 5%] of total sales in fiscal [removed: 2019.][added: 2020.]

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

For purchases made on Lowes.com, customers may pick up their purchase [removed: in-store,] [added: in-store at the customer service desk, curbside pick-up, or touchless lockers;] have their purchase delivered from a [removed: store,] [added: store;] or have their purchase parcel shipped.

Our [removed: 1,792] [added: 1,795] Lowe’s-branded home improvement stores, inclusive of [removed: 1,728] [added: 1,734] in the U.S. and [removed: 64] [added: 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 [removed: 185] [added: 179] 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 [removed: local market factors.][added: localization.]

We enable customers to choose from a variety of fulfillment options, including buying online and picking up in-store, as well as delivery or parcel shipment to their [removed: homes.][added: homes or businesses.]

Our Pro Sales Managers meet with Pro customers at their place of business or on a job site and leverage nearby stores [added: and our distribution network to ensure we meet customer needs for products and resources.]

[removed: In addition, our Project Specialist] Exteriors (PSE) program is available in a majority of U.S. Lowe’s home improvement stores to discuss exterior projects such as roofing, siding, fencing, and windows, whose characteristics lend themselves to an in-home consultative sales approach.

As of January [removed: 31, 2020, we] [added: 29, 2021, Lowe’s] employed approximately [removed: 200,000] [added: 220,000] full-time [added: associates] and 120,000 part-time [removed: employees.][added: associates, primarily in the United States and Canada.]

For more detailed information, see the Financial Condition, Liquidity and Capital Resources section in [Item [removed: 7](#s7C77936D13A951209C9B2FF63865C88D),] [added: 7](#i9842e66b35c94868bbc06decd778cbf4_49),] “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report.

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

This subsidiary and other [removed: wholly owned] [added: wholly-owned] subsidiaries own and maintain various additional registered and unregistered trademarks, trade names and service marks, including but not limited to retail names “RONA” and “Reno Depot”, and private brand product names “Kobalt” and “allen+roth”.

In fiscal [removed: 2019,] [added: 2020, for the second consecutive year,] Lowe’s was [removed: added to] [added: included in] the Dow Jones Sustainability North America Index based on [added: our] environmental, social, and governance practices.

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

value, across every channel and community we serve.

In addition, our Project Specialist

Human Capital

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

*Our People*

In fiscal 2020, we expanded our workforce, hiring associates in part-time, seasonal and full-time positions to fulfill the seasonal demand of our Spring season, increased demand during the COVID-19 pandemic as customers focused on home improvement projects, and a nationwide effort to modify our store layout.

*Diversity and Inclusion*

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

During fiscal 2019, we kicked-off a multi-year program to integrate diversity and inclusion initiatives into our corporate strategy across three areas: talent, culture and business.

To foster an inclusive culture, we launched seven business resource employee groups sponsored by our executive leadership team in 2019 and continued to support those groups virtually in 2020.

*Talent Development*

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

We offer a variety of leadership and development programs that develop diverse and other high potential associates.

We also have certification programs available to our store and technology associates to further develop their skills and knowledge base.

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

We have also seen great strides in our internal culture.

This year, we saw higher participation and engagement scores in our annual Building Engagement and Success Together (BEST) associate engagement survey which helps senior management understand from our associates what Lowe’s is doing well and where we have opportunities for improvement.

*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 history 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 novel strain of coronavirus (COVID-19) pandemic, we expanded benefits and wellness programs to increase access to care.

We waived co-payments on pharmacy home deliveries, covered 100% of COVID-19 testing and related treatment, expanded telemedicine services to our uninsured associates, shifted onsite clinics to a virtual care model, and launched a new virtual behavioral health app.

We also provided 14 days of emergency paid leave for all associates who needed it, and up to four weeks of emergency paid leave for associates at high risk of severe illness from COVID-19.

During fiscal 2020, we provided $915 million in incremental COVID-related financial support for our front-line hourly associates.

This included seven discretionary payments of $300 for full-time hourly associates and $150 for part-time hourly associates, as well as a temporary $2 per hour wage increase in the month of April, and emergency paid leave taken by associates who needed it.

*Store and Workplace Safety*

Our associates and customers drive our success and providing them a safe environment for both working and shopping is essential.

We strive to maintain a culture of safety beginning with our leaders modeling the behaviors we want our associates to adopt, and we embed safety into associate onboarding, developmental e-learning and on-the-job training.

In fiscal 2020, in response to the COVID-19 pandemic, we implemented numerous safety standards in support of social distancing and enhanced sanitizing and cleaning.

Government Regulation

We are subject to a wide array of federal, state, and local laws and regulations.

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

Lowe’s has a proud history of managing our business responsibly and serving our associates and communities.

We believe our commitment to sustainability, including our focus on product sustainability, our associates and communities, and reducing the environmental footprint of our operations will help drive long-term shareholder value.

*Product Sustainability*

Lowe’s is committed to promoting sustainable practices throughout our supply chain and providing customers with high quality and safe products.

In fiscal 2020, we also updated our Vendor Code of Conduct with enhanced environmental standards for all suppliers.

During 2018 and 2019, the Company initiated a strategic reassessment of its business which has resulted in the exit of Orchard Supply Hardware and its operations in Mexico, as well as the closure of under-performing stores across the U.S. and Canada.

expectations also underscores the importance of omni-channel capabilities as a competitive factor.

In 2019, we completed our rollout of CRAFTSMAN® tools.

and our distribution network to ensure we meet customer needs for products and resources.

Employees

Lowe’s is committed to leveraging our time, talents and resources to make our world better by making our communities stronger and encouraging people to want to connect with us as their partner in home improvement.

Sustainability and environmental matters are overseen by the Sustainability Committee of the Board of Directors.

The Sustainability Committee monitors sustainability and environmental related trends and risks.

The Company also has a Sustainability Council, led by senior executives focused on efficiently integrating sustainability into day-to-day operations.

Our strategy focuses on responsible sourcing, offering safe and eco-friendly products, maintaining a diverse, healthy, engaged, and skilled workforce, supporting our local communities through safe and affordable housing, and operating ethically and responsibly.

We have established goals to advance our corporate responsibility efforts, which can be found in our annual corporate responsibility report available at Newsroom.Lowes.com/Responsibility.

We want our customers to feel good about the high-quality products they choose at Lowe’s.

We give considerable attention to how our products are created and to the people who make them.

We also include innovative, efficient and eco-certified products in our portfolio that provide health and environmental benefits to meet the needs of an increasing customer demand.

We continue to work with local and regional

As a responsible corporate citizen, Lowe’s takes environmental sustainability and product safety seriously.

In fiscal 2019, we conducted a pilot audit for compliance verification to Lowe’s wood sourcing policy and plan to roll out the audit process broadly in 2020.

Also, Lowe’s updated our safer chemicals policy, which guides our actions toward offering safer, more eco-friendly alternatives.

In addition, Lowe’s stopped the sale of all products containing methylene chloride and N-Methyl-2-Pyrrolidone (NMP) online and from our stores and stopped purchasing residential carpet and rugs containing polyfluoroalkyl substances (PFAS).

We are committed to reducing our climate impact through sustainable practices and conservation.

The wind turbines will produce the equivalent amount of energy to power all 144 Lowe’s stores in Texas.

We met both of our 2020 climate goals ahead of schedule and developed a more aggressive goal for 2030, to reduce our absolute scope 1 and 2 emissions by 40% below 2016 levels.

Lowe’s believes in giving back to the neighborhoods where its associates live and work.

Through charitable contributions, associate volunteerism and nonprofit partnerships, Lowe's has invested in communities since its inception.

As a Fortune® 50 home improvement company, Lowe’s is committed to creating safe and affordable housing and helping develop the next generation of skilled trade experts.

Lowe’s and the Lowe’s Foundation donated more than $42 million in 2019 to nonprofit organizations supporting local communities in these areas, as well as military and disaster response.

This year, Lowe’s worked with organizations like Habitat for Humanity International, Rebuilding Together, Sleep In Heavenly Peace, Purple Heart Homes and Operation Finally Home to identify and address critical housing needs nationwide as part of its safe and affordable housing initiatives.

By partnering with AMVETS, USO, National Urban League and SkillsUSA, Lowe's is working to address the skilled trades education gap through education, job creation, and community investments.

Lowe's support for communities impacted by disaster goes far beyond clean-up and recovery supplies.

Lowe's partners with the American Red Cross, Reach Out WorldWide, Operation BBQ Relief, Federal Alliance for Safe Homes (FLASH) and others to not only respond to immediate needs, but to support impacted areas with rebuilding efforts in the months and years to come.

In 2019, Lowe’s contributed more than $2 million to disaster relief and mobilized employee volunteers to help communities recovering from natural disasters like Hurricane Dorian, Texas flooding, California wildfires, and tornadoes across the southeast.

Lowe's is also passionate about serving its communities and encourages associates to support the neighborhoods where they live and work.

Through the Lowe’s Heroes program, funds are allocated to each U.S. and Canadian store for a project in its community that associates can complete together.

In 2019, all Lowe’s stores were able to give back to their communities due to this funding.

In addition, associates at company headquarters participated in on-campus community projects during the year, including assembling disaster cleanup buckets to be deployed to impacted areas after natural disasters and building beds that were donated to Sleep in Heavenly Peace, a nonprofit partner with a goal to end child bedlessness across the United States.

As previously reported, in May 2019, the Company received a letter from the California South Coast Air Quality Management District (“SCAQMD”) regarding allegations that the Company sold denatured alcohol since 2015 in a manner that is not compliant with applicable rules.

The Company has settled the matter with SCAQMD, and the outcome did not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended January 31, 2020][added: ended January 29, 2021]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

[removed: ][added: ]

| North Carolina | | | | [added: | | | | | | | |] 56-0578072 | | | [added: | | | | | |]

| (State or other jurisdiction of incorporation or organization) | | | | [added: | | | | | | | |] (I.R.S. Employer Identification No.) | | | [added: | | | | | |]

| [removed: Mooresville] [added: 1000 Lowes Blvd., Mooresville, North Carolina] | | [removed: North Carolina] | | [added: | | | | | | | |] 28117 | | | [added: | | | | | |]

| (Address of principal executive offices) | | | | [added: | | | | | | | |] (Zip Code) | | | [added: | | | | | |]

| Registrant’s telephone number, including area code | | | | [removed: (704)] | | [removed: 758-1000] | [added: | | | | | (704) 758-1000 | | | | | | | | |]

| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, par value $0.50 per share | [added: | |] LOW | [added: | |] New York Stock Exchange | [added: | |]

| Large accelerated filer | [added: | |] ☒ | | [added: | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | | [added: | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | | [added: | | | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

As of [removed: August 2, 2019,] [added: July 31, 2020,] the last business day of the Company’s most recent second quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was [removed: $77.0] [added: $112.5] billion based on the closing sale price as reported on the New York Stock Exchange.

| CLASS | | [added: | | | |] OUTSTANDING AT [removed: 3/20/2020] [added: 3/19/2021] | [added: | |]

| Common Stock, $0.50 par value | | [removed: 754,948,648] | [added: | | | 717,256,852 | | |]

| Document | | [added: | | | |] Parts Into Which Incorporated | [added: | |]

| Portions of the Proxy Statement for Lowe’s [removed: 2020] [added: 2021] Annual Meeting of Shareholders | | [added: | | | |] Part III | [added: | |]

| | | | [added: | | | | | |] Page No. | [added: | |]

| PART I | | | | [added: | | | | | | | |]

| | [added: | |] Item 1. | [removed: [Business](#s482DAC57C8415BB9AB8DE738EC2820C9)] | [removed: [5](#s482DAC57C8415BB9AB8DE738EC2820C9)] | [added: [Business](#i9842e66b35c94868bbc06decd778cbf4_16) | | | [1](#i9842e66b35c94868bbc06decd778cbf4_16) | | |]

| | [added: | |] Item 1A. | [added: | |] [Risk [removed: Factors](#sFB3427BA35E15EDAB5DBA7A175831645)] [added: Factors](#i9842e66b35c94868bbc06decd778cbf4_22)] | [removed: [10](#sFB3427BA35E15EDAB5DBA7A175831645)] | [added: | [7](#i9842e66b35c94868bbc06decd778cbf4_22) | | |]

| | [added: | |] Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#sC8E4250ACFCF5602A607F33AE0512086)] [added: Comments](#i9842e66b35c94868bbc06decd778cbf4_25)] | [removed: [17](#sC8E4250ACFCF5602A607F33AE0512086)] | [added: | [14](#i9842e66b35c94868bbc06decd778cbf4_25) | | |]

| | [added: | |] Item 2. | [removed: [Properties](#s1971CF2DEDAA52A58F74E461F2858777)] | [removed: [17](#s1971CF2DEDAA52A58F74E461F2858777)] | [added: [Properties](#i9842e66b35c94868bbc06decd778cbf4_28) | | | [14](#i9842e66b35c94868bbc06decd778cbf4_28) | | |]

| | [added: | |] Item 3. | [added: | |] [Legal [removed: Proceedings](#sCD2B9741D95D5C899B7B8FBE63E059A5)] [added: Proceedings](#i9842e66b35c94868bbc06decd778cbf4_31)] | [removed: [17](#sCD2B9741D95D5C899B7B8FBE63E059A5)] | [added: | [14](#i9842e66b35c94868bbc06decd778cbf4_31) | | |]

| | [added: | |] Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#s8D02F5AA932D5FF8A3146B2F325E6C5B)] [added: Disclosures](#i9842e66b35c94868bbc06decd778cbf4_34)] | [removed: [17](#s8D02F5AA932D5FF8A3146B2F325E6C5B)] | [added: | [14](#i9842e66b35c94868bbc06decd778cbf4_34) | | |]

| | | [added: | | | |] [Information About Our Executive [removed: Officers](#sDDBF0D3C11265C0E923683F4270FDA44)] [added: Officers](#i9842e66b35c94868bbc06decd778cbf4_37)] | [removed: [18](#sDDBF0D3C11265C0E923683F4270FDA44)] | [added: | [15](#i9842e66b35c94868bbc06decd778cbf4_37) | | |]

| PART II | | | | [added: | | | | | | | |]

| | [added: | |] Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s98067AA8FC245A0491987BA53E0512B1)] [added: Securities](#i9842e66b35c94868bbc06decd778cbf4_43)] | [removed: [19](#s98067AA8FC245A0491987BA53E0512B1)] | [added: | [16](#i9842e66b35c94868bbc06decd778cbf4_43) | | |]

| | [added: | |] Item 6. | [added: | |] [Selected Financial [removed: Data](#sEEE4A64BCE2952EC91FE6672E6E1C3B8)] [added: Data](#i9842e66b35c94868bbc06decd778cbf4_46)] | [removed: [20](#sEEE4A64BCE2952EC91FE6672E6E1C3B8)] | [added: | [17](#i9842e66b35c94868bbc06decd778cbf4_46) | | |]

| | [added: | |] Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s7C77936D13A951209C9B2FF63865C88D)] [added: Operations](#i9842e66b35c94868bbc06decd778cbf4_49)] | [removed: [21](#s7C77936D13A951209C9B2FF63865C88D)] | [added: | [18](#i9842e66b35c94868bbc06decd778cbf4_49) | | |]

| | [added: | |] Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sE8067096EB85572586E11919FD66EA13)] [added: Risk](#i9842e66b35c94868bbc06decd778cbf4_91)] | [removed: [35](#sE8067096EB85572586E11919FD66EA13)] | [added: | [31](#i9842e66b35c94868bbc06decd778cbf4_91) | | |]

| | [added: | |] Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#sDA86F660CCEB5055BB609F193FB7EF74)] [added: Data](#i9842e66b35c94868bbc06decd778cbf4_94)] | [removed: [36](#sDA86F660CCEB5055BB609F193FB7EF74)] | [added: | [32](#i9842e66b35c94868bbc06decd778cbf4_94) | | |]

| | [added: | |] Item 9. | [added: | |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s0420756B6DEC531AAC6AB63273132015)] [added: Disclosure](#i9842e66b35c94868bbc06decd778cbf4_223)] | [removed: [76](#s0420756B6DEC531AAC6AB63273132015)] | [added: | [68](#i9842e66b35c94868bbc06decd778cbf4_223) | | |]

| | [added: | |] Item 9A. | [added: | |] [Controls and [removed: Procedures](#s96C037FC58E5574FA993604811619018)] [added: Procedures](#i9842e66b35c94868bbc06decd778cbf4_226)] | [removed: [76](#s96C037FC58E5574FA993604811619018)] | [added: | [68](#i9842e66b35c94868bbc06decd778cbf4_226) | | |]

| | [added: | |] Item 9B. | [added: | |] [Other [removed: Information](#sEEF8DD17647753EFB95DA5207531472C)] [added: Information](#i9842e66b35c94868bbc06decd778cbf4_229)] | [removed: [76](#sEEF8DD17647753EFB95DA5207531472C)] | [added: | [68](#i9842e66b35c94868bbc06decd778cbf4_229) | | |]

| PART III | | | | [added: | | | | | | | |]

| | [added: | |] Item 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sC6692DC0448353468E1A8A0E64D3117D)] [added: Governance](#i9842e66b35c94868bbc06decd778cbf4_235)] | [removed: [77](#sC6692DC0448353468E1A8A0E64D3117D)] | [added: | [69](#i9842e66b35c94868bbc06decd778cbf4_235) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [Disclosure Regarding Forward-Looking Statements](#i9842e66b35c94868bbc06decd778cbf4_10) | | | | | | | | | [ii](#i9842e66b35c94868bbc06decd778cbf4_10) | | |

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| | | | | | | [Signatures](#i9842e66b35c94868bbc06decd778cbf4_268) | | | [81](#i9842e66b35c94868bbc06decd778cbf4_268) | | |

Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

ii

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| 1000 Lowe’s Blvd. | | | | | | |

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| | | [Signatures](#s99B208889A3E520CAECF10DD584D79A4) | [88](#s99B208889A3E520CAECF10DD584D79A4) |

Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties.

All forward-looking statements speak only as of the date of this Annual Report or, in the case of any document incorporated by reference, the date of that document.

All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section and in Item 1A, “Risk Factors” included elsewhere in this Annual Report.

We do not undertake any obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this Annual Report.

At January [removed: 31, 2020,] [added: 29, 2021,] our properties consisted of [removed: 1,977] [added: 1,974] stores in the U.S. and Canada with a total of approximately 208 million square feet of selling space.

Of the total stores operating at January [removed: 31, 2020,] [added: 29, 2021,] approximately 84% are owned, which includes stores on leased land, with the remainder being leased from third parties.

Set forth below is a list of names and ages of the executive officers of the registrant indicating all positions and offices with the registrant held by each such person and each person’s principal occupations or employment during the past five [removed: years.][added: years unless otherwise noted.]

| Name | | [added: | | | |] Age | | [added: | | | |] Title | [added: | |]

| Marvin R. Ellison | | [removed: 55] | | [added: | | 56 | | | | | |] President and Chief Executive Officer since July 2018; Chairman of the Board and Chief Executive Officer, J.C. Penney Company, Inc. (a department store retailer), 2016 [removed: -] [added: –] May 2018; Chief Executive Officer, J.C. Penney Company, Inc., 2015 [removed: -] [added: –] 2016; President, J.C. Penney Company, Inc., 2014 [removed: -] [added: –] 2015; Executive Vice President [removed: -] [added: –] U.S. Stores, The Home Depot, Inc. (a home improvement retailer) 2008 [removed: -] [added: –] 2014. | [added: | |]

| William P. Boltz | | [removed: 57] | | [added: | | 58 | | | | | |] Executive Vice President, Merchandising since August 2018; President and CEO, Chervon North America (a global power tool supplier), [removed: 2015-2018;] [added: 2015 – 2018;] President and owner of The Boltz Group, LLC (a retail consulting firm), 2013 [removed: -] [added: –] 2015; Senior Vice President, Merchandising, The Home Depot, Inc. (a home improvement retailer), 2006 [removed: -] [added: –] 2012. | [added: | |]

| David M. Denton | | [removed: 54] | | [added: | | 55 | | | | | |] Executive Vice President and Chief Financial Officer since November 2018; Executive Vice President and Chief Financial Officer, CVS Health Corporation (a pharmacy innovation company), 2010 – November 2018. | [added: | |]

| Donald E. Frieson | | [removed: 61] | | [added: | | 62 | | | | | |] Executive Vice President, Supply Chain since August 2018; Executive Vice President, Operations, Sam’s Club (a general merchandise retailer), 2014 [removed: -] [added: –] 2017; Senior Vice President, Replenishment, Planning and Real Estate, Sam’s Club, 2012 [removed: -] [added: –] 2014. | [added: | |]

| Seemantini Godbole | | [removed: 50] | | [added: | | 51 | | | | | |] Executive Vice President, Chief Information Officer since November 2018; Senior Vice President, Technology and Digital, Target Corporation (a department store retailer), January 2017 – November 2018; Vice President, Technology and Digital, Target Corporation, 2013 – December 2016. | [added: | |]

| Ross W. McCanless | | [removed: 62] | | [added: | | 63 | | | | | |] Executive Vice President, General Counsel and Corporate Secretary since 2017; Chief Legal Officer, Secretary and Chief Compliance Officer, 2016 [removed: -] [added: –] 2017; General Counsel, Secretary and Chief Compliance Officer, 2015 [removed: -] [added: –] 2016; Chief Legal Officer, Extended Stay America, Inc. (a hotel operating company) and ESH Hospitality, Inc. (a hotel real estate investment company), 2013 [removed: -] [added: –] 2014. | [added: | |]

| Joseph M. McFarland III | | [removed: 50] | | [added: | | 51 | | | | | |] Executive Vice President, Stores since August 2018; Executive Vice President and Chief Customer Officer, J.C. Penney Company, Inc. (a department store retailer), March 2018 – August 2018; Executive Vice President, Stores, J.C. Penney Company, Inc., 2016 – March 2018; Divisional President, The Home Depot, Inc. (a home improvement retailer), 2007 – 2015. | [added: | |]

| Marisa F. Thalberg | | [removed: 50] | | [added: | | 51 | | | | | |] Executive Vice President, Chief Brand and Marketing Officer since February 2020; Global Chief Brand Officer, Taco Bell Corporation (a fast-food company), January 2018 [removed: -] [added: –] February 2020; Chief Marketing Officer, Taco Bell Corporation, January 2016 [removed: -] [added: –] January 2018; Chief Brand Engagement Officer, Taco Bell Corporation, May 2015 [removed: -] [added: –] January 2016; Vice President, Corporate Digital and Content Marketing Worldwide, The [removed: Estee] [added: Estée] Lauder Companies (a beauty products company), 2007 [removed: -] [added: –] May 2015. | [added: | |]

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| Janice Dupré | | | | | | 56 | | | | | | Executive Vice President, Human Resources since June 2020; Senior Vice President, Talent Management & Diversity and Global Chief Diversity Officer, January 2020 – June 2020; Vice President, Leadership Development and Global Chief Diversity Officer, November 2017 – January 2020; Vice President of Diversity & Inclusion, McKesson Corporation (a healthcare company), June 2015 – October 2017. | | |

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| Dan C. Griggs, Jr. | | | | | | 43 | | | | | | Senior Vice President, Tax and Chief Accounting Officer since February 2021; Vice President, Chief Accounting Officer, October 2020 – February 2021; Vice President, Corporate Controller, May 2019 – October 2020; Vice President Corporate Controller, CommScope Inc. (a global network infrastructure provider), March 2019 – May 2019; Technical Accounting Director, CommScope Inc., October 2015 – March 2019. | | |

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| Jennifer L. Weber | | 53 | | Executive Vice President, Chief Human Resources Officer since 2016; Executive Vice President, External Affairs and Strategic Policy, Duke Energy Corporation (an electric power company), 2014 – 2016. Executive Vice President and Chief Human Resources Officer, Duke Energy Corporation, 2011 - 2014. |

As of March [removed: 20, 2020,] [added: 19, 2021,] there were [removed: 22,129] [added: 21,657] holders of record of Lowe’s common stock.

The graph assumes $100 invested on January [removed: 30, 2015] [added: 29, 2016] in the Company’s common stock and each of the indices.

[removed: ][added: ]

| | [removed: 1/30/2015] | | [added: 1/29/2016] | | [removed: 1/29/2016] | | | | 2/3/2017 | | | | [added: | |] 2/2/2018 | | | | [added: | |] 2/1/2019 | | | | [added: | |] 1/31/2020 | | | [added: | | | 1/29/2021 | | |]

The following table sets forth information with respect to purchases of the Company’s common stock made during the fourth quarter of fiscal [removed: 2019:][added: 2020:]

| | [added: | |] Total Number of Shares Purchased 1 | | | [added: | | |] Average [removed: Price Paid] [added: Price Paid] per Share | | | | [added: | |] Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2 | | | [added: | | |] Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2 | | |

[removed: |] 1 [removed: |] *The total number of shares purchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.* [removed: |]

[removed: |] 2 [removed: |] *On December [removed: 12, 2018,] [added: 9, 2020,] the Company announced that its Board of Directors authorized an additional [removed: $10.0] [added: $15.0] billion of share repurchases, in addition to the [removed: $5.0] [added: $10.0] billion of share repurchases authorized by the Board of Directors in [removed: January] [added: December] 2018, with no expiration.* [removed: |]

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| Lowe’s | | | $ | 100.00 | | | | | $ | 102.27 | | | | | $ | 141.64 | | | | | $ | 135.51 | | | | | $ | 162.21 | | | | | $ | 232.84 | |

| S&P 500 | | | 100.00 | | | | | | 121.06 | | | | | | 148.46 | | | | | | 148.38 | | | | | | 180.37 | | | | | | 211.48 | | |

| S&P Retail Index | | | $ | 100.00 | | | | | $ | 116.33 | | | | | $ | 164.08 | | | | | $ | 176.14 | | | | | $ | 210.51 | | | | | $ | 295.76 | |

| October 31, 2020 - November 27, 2020 | | | 19,438,168 | | | | | | $ | 160.59 | | | | | 19,437,809 | | | | | | $ | 4,717,617,201 | |

| November 28, 2020 - January 1, 2021 | | | 2,086 | | | | | | 162.37 | | | | | | — | | | | | | 19,717,617,201 | | |

| January 2, 2021 - January 29, 2021 | | | 1,632,370 | | | | | | 160.67 | | | | | | 1,627,242 | | | | | | 19,717,617,201 | | |

| As of January 29, 2021 | | | 21,072,624 | | | | | | $ | 160.59 | | | | | 21,065,051 | | | | | | $ | 19,717,617,201 | |

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| Lowe’s | $ | 100.00 | | | $ | 107.38 | | | $ | 111.78 | | | $ | 157.69 | | | $ | 153.89 | | | $ | 187.74 | |

| S&P 500 | 100.00 | | | | 99.33 | | | | 120.26 | | | | 147.48 | | | | 147.40 | | | | 179.17 | | |

| S&P Retail Index | $ | 100.00 | | | $ | 115.56 | | | $ | 134.42 | | | $ | 189.60 | | | $ | 203.54 | | | $ | 243.26 | |

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| November 2, 2019 – November 29, 2019 | 1,639,183 | | | $ | 115.11 | | | 1,639,183 | | | $ | 10,138,558,200 | |

| November 30, 2019 – January 3, 2020 | 2,545,679 | | | 118.34 | | | | 2,545,047 | | | 9,837,384,381 | | |

| January 4, 2020 – January 31, 2020 | 1,493,160 | | | 120.62 | | | | 1,492,237 | | | 9,657,384,423 | | |

| As of January 31, 2020 | 5,678,022 | | | $ | 118.01 | | | 5,676,467 | | | $ | 9,657,384,423 | |

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| Selected Statement of Earnings Data (In millions, except per share data) | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 20181 | | | | [removed: 2017] | | [added: 2017] | | [removed: 20162, 3] | | | | [removed: 2015] [added: 20162] | | |

| Net sales | [added: | |] $ | [removed: 72,148] [added: 89,597] | | | [added: | |] $ | [removed: 71,309] [added: 72,148] | | | [added: | |] $ | [removed: 68,619] [added: 71,309] | | | [added: | |] $ | [removed: 65,017] [added: 68,619] | | | [added: | |] $ | [removed: 59,074] [added: 65,017] | |

| Gross margin | [added: | | 29,572 | | | | | |] 22,943 | | | | [added: | |] 22,908 | | | | [removed: 22,434] | | [added: 22,434] | | [removed: 21,674] | | | | [removed: 19,933] [added: 21,674] | | |

| Operating income | [added: | | 9,647 | | | | | |] 6,314 | | | | [added: | |] 4,018 | | | | [removed: 6,586] | | [added: 6,586] | | [removed: 5,846] | | | | [removed: 4,971] [added: 5,846] | | |

| Net earnings | [added: | | 5,835 | | | | | |] 4,281 | | | | [added: | |] 2,314 | | | | [removed: 3,447] | | [added: 3,447] | | [removed: 3,093] | | | | [removed: 2,546] [added: 3,093] | | |

| Basic earnings per common share | [added: | | 7.77 | | | | | |] 5.49 | | | | [added: | |] 2.84 | | | | [removed: 4.09] | | [added: 4.09] | | [removed: 3.48] | | | | [removed: 2.73] [added: 3.48] | | |

| Diluted earnings per common share | [added: | | 7.75 | | | | | |] 5.49 | | | | [added: | |] 2.84 | | | | [removed: 4.09] | | [added: 4.09] | | [removed: 3.47] | | | | [removed: 2.73] [added: 3.47] | | |

| Dividends per share | [added: | |] $ | [removed: 2.13] [added: 2.30] | | | [added: | |] $ | [removed: 1.85] [added: 2.13] | | | [added: | |] $ | [removed: 1.58] [added: 1.85] | | | [added: | |] $ | [removed: 1.33] [added: 1.58] | | | [added: | |] $ | [removed: 1.07] [added: 1.33] | |

| Selected Balance Sheet Data | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Total [removed: assets4] [added: assets3] | [added: | |] $ | [removed: 39,471] [added: 46,735] | | | [added: | |] $ | [removed: 34,508] [added: 39,471] | | | [added: | |] $ | [removed: 35,291] [added: 34,508] | | | [added: | |] $ | [removed: 34,408] [added: 35,291] | | | [added: | |] $ | [removed: 31,266] [added: 34,408] | |

| Long-term debt, excluding current maturities | [added: | |] $ | [removed: 16,768] [added: 20,668] | | | [added: | |] $ | [removed: 14,391] [added: 16,768] | | | [added: | |] $ | [removed: 15,564] [added: 14,391] | | | [added: | |] $ | [removed: 14,394] [added: 15,564] | | | [added: | |] $ | [removed: 11,545] [added: 14,394] | |

[removed: | 1 | *Effective February 3, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments, using the modified retrospective method.] Therefore, results for reporting periods beginning after February 2, 2018 are presented under ASU 2014-09, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods.* [removed: |]

[removed: |] 2 [removed: |] *Fiscal 2016 contained 53 weeks, while all other years contained 52 weeks.* [removed: |]

[removed: | *4* |] [added: 3] *Effective February 2, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), and all related amendments, using the optional transition approach to not restate comparative periods and recognized the cumulative impact of adoption in the opening balance of retained earnings. [removed: Therefore, results for reporting periods beginning after February 1, 2019 are presented under ASU 2016-02, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods.* |]

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1 *Effective February 3, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments, using the modified retrospective method.

Therefore, results for reporting periods beginning after February 1, 2019 are presented under ASU 2016-02, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods.*

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| --- | --- |

| 3 | *Fiscal 2016 includes the acquisition of RONA inc.* |

| Table of Contents | | [added: | | | |]

| | [added: | |] Page No. | [added: | |]

| [Management’s Report on Internal Control over Financial [removed: Reporting](#s44F9FC5E394F5137ADFBC88AE7AB357B)] [added: Reporting](#i9842e66b35c94868bbc06decd778cbf4_97)] | [removed: [37](#s44F9FC5E394F5137ADFBC88AE7AB357B)] | [added: | [33](#i9842e66b35c94868bbc06decd778cbf4_97) | | |]

| [Report of Independent Registered Public Accounting [removed: Firm](#s85250D8085A2569293FBA2CDFB634D13)] [added: Firm](#i9842e66b35c94868bbc06decd778cbf4_100)] | [removed: [38](#s85250D8085A2569293FBA2CDFB634D13)] | [added: | [34](#i9842e66b35c94868bbc06decd778cbf4_100) | | |]

| [Consolidated Statements of [removed: Earnings](#s9CBBD7F679195A928A8879D29210C073)] [added: Earnings](#i9842e66b35c94868bbc06decd778cbf4_106)] | [removed: [41](#s9CBBD7F679195A928A8879D29210C073)] | [added: | [37](#i9842e66b35c94868bbc06decd778cbf4_106) | | |]

| [Consolidated Statements of Comprehensive [removed: Income](#s7F5030DAA6D258579147A894540A4E95)] [added: Income](#i9842e66b35c94868bbc06decd778cbf4_109)] | [removed: [41](#s7F5030DAA6D258579147A894540A4E95)] | [added: | [37](#i9842e66b35c94868bbc06decd778cbf4_109) | | |]

| [Consolidated Balance [removed: Sheets](#sB19D8035137F5482BF10AF8D94D70FA4)] [added: Sheets](#i9842e66b35c94868bbc06decd778cbf4_112)] | [removed: [42](#sB19D8035137F5482BF10AF8D94D70FA4)] | [added: | [38](#i9842e66b35c94868bbc06decd778cbf4_112) | | |]

| [Consolidated Statements of Shareholders’ [removed: Equity](#s134F7CE573195FE48BACC8614D42AD05)] [added: Equity](#i9842e66b35c94868bbc06decd778cbf4_118)] | [removed: [43](#s134F7CE573195FE48BACC8614D42AD05)] | [added: | [39](#i9842e66b35c94868bbc06decd778cbf4_118) | | |]

| [Consolidated Statements of Cash [removed: Flows](#sB2FBD8508B18545F8326160E6AA4ED89)] [added: Flows](#i9842e66b35c94868bbc06decd778cbf4_124)] | [removed: [44](#sB2FBD8508B18545F8326160E6AA4ED89)] | [added: | [40](#i9842e66b35c94868bbc06decd778cbf4_124) | | |]

| [Notes to Consolidated Financial [removed: Statements](#s0F7FEAA00CAC5765907144C470227701)] [added: Statements](#i9842e66b35c94868bbc06decd778cbf4_127)] | [removed: [45](#s0F7FEAA00CAC5765907144C470227701)] | [added: | [41](#i9842e66b35c94868bbc06decd778cbf4_127) | | |]

[removed: | [Note] [added: NOTE] 1: Summary of Significant Accounting [removed: Policies](#s6C2305446EB25692A7427B70418C4759) | [45](#s6C2305446EB25692A7427B70418C4759) |][added: Policies]

[removed: | [Note] [added: NOTE] 2: [removed: Revenue](#sA2B91C6175075AB5B989C4F047B506F2) | [51](#sA2B91C6175075AB5B989C4F047B506F2) |][added: Revenue]

[removed: | [Note] [added: NOTE] 5: [removed: Leases](#s02C49CA187C859D9B2822F8B0C379B98) | [54](#s02C49CA187C859D9B2822F8B0C379B98) |][added: Leases]

[removed: | [Note 6:] [added: NOTE 3:] Fair Value [removed: Measurements](#sF950365787E1575E99CFD41A7A97C571) | [56](#sF950365787E1575E99CFD41A7A97C571) |][added: Measurements]

[removed: | [Note 7:] [added: NOTE 4:] Property and Accumulated [removed: Depreciation](#s7141223CF06254E4B16BA7444281B7F7) | [59](#s7141223CF06254E4B16BA7444281B7F7) |][added: Depreciation]

[removed: | [Note 8:] [added: NOTE 6:] Exit [removed: Activities](#s16B015ABFAED5EF78AE741F06AE07EBB) | [60](#s16B015ABFAED5EF78AE741F06AE07EBB) |][added: Activities]

[removed: | [Note 9:] [added: NOTE 7:] Short-Term [removed: Borrowings](#s96782D528E795C0B9FF2675323C5699B) | [62](#s96782D528E795C0B9FF2675323C5699B) |][added: Borrowings]

[removed: | [Note 10:] [added: NOTE 8:] Long-Term [removed: Debt](#s58D2E29650955E37827F37375A98862B) | [63](#s58D2E29650955E37827F37375A98862B) |][added: Debt]

[removed: | [Note 11:] [added: NOTE 10:] Shareholders’ [removed: Equity](#s947ED68F44535DA9843D171862A48FF6) | [64](#s947ED68F44535DA9843D171862A48FF6) |][added: Equity]

[removed: | [Note 12:] [added: NOTE 11:] Accounting for Share-Based [removed: Payments](#sC585BBEEED2455B48F138A1DDE69DB2A) | [65](#sC585BBEEED2455B48F138A1DDE69DB2A) |][added: Payments]

[removed: | [Note 13:] [added: NOTE 12:] Employee Retirement [removed: Plans](#sB26E785C750D58AD98F1D360E962B91B) | [69](#sB26E785C750D58AD98F1D360E962B91B) |][added: Plans]

[removed: | [Note 14:] [added: NOTE 13:] Income [removed: Taxes](#sC2DBB82F4801503EB524611C49465639) | [70](#sC2DBB82F4801503EB524611C49465639) |][added: Taxes]

[removed: | [Note 15:] [added: Note 14:] Earnings Per [removed: Share](#s1914CD03F94D5625B7C237CD69AC9C90) | [72](#s1914CD03F94D5625B7C237CD69AC9C90) |][added: Share]

[removed: | [Note 16:] [added: NOTE 15:] Commitments and [removed: Contingencies](#s53903D34A22155E6BFA7E710E631B6EE) | [72](#s53903D34A22155E6BFA7E710E631B6EE) |][added: Contingencies]

[removed: | [Note 17:] [added: NOTE 16:] Related [removed: Parties](#s257D0358DC535F199E04D118B68A11F9) | [73](#s257D0358DC535F199E04D118B68A11F9) |][added: Parties]

[removed: | [Note 18:] [added: NOTE 17:] Other [removed: Information](#s59DE1DBDF6DD5B9E9DF7AF1A02040E36) | [73](#s59DE1DBDF6DD5B9E9DF7AF1A02040E36) |][added: Information]

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our Internal Control as of January [removed: 31, 2020.][added: 29, 2021.]

In evaluating our Internal Control, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal [removed: Control—Integrated] [added: Control – Integrated] Framework (2013).

Based on our management’s assessment, we have concluded that, as of January [removed: 31, 2020,] [added: 29, 2021,] our Internal Control is effective.

Their report appears on page [removed: 40.][added: [36](#i9842e66b35c94868bbc06decd778cbf4_103).]

We have audited the accompanying consolidated balance sheets of Lowe’s Companies, Inc. and subsidiaries (the “Company”) as of January [removed: 31, 2020] [added: 29, 2021] and [removed: February 1, 2019,] [added: January 31, 2020,] the related consolidated statements of earnings, comprehensive income, shareholders’ equity, and cash flows, for each of the three fiscal years in the period ended January [removed: 31, 2020,] [added: 29, 2021,] and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January [removed: 31, 2020] [added: 29, 2021] and [removed: February 1, 2019,] [added: January 31, 2020,] and the results of its operations and its cash flows for each of the three fiscal years in the period ended January [removed: 31, 2020,] [added: 29, 2021,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January [removed: 31, 2020,] [added: 29, 2021,] based on criteria established in *Internal [removed: Control - Integrated] [added: Control* – *Integrated] Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March [removed: 23, 2020,] [added: 22, 2021,] expressed an unqualified opinion on the Company's internal control over financial reporting.

As discussed in Note [removed: 1] [added: 5] to the financial statements, the Company [removed: has] changed its method of accounting for leases in the fiscal year ended January 31, 2020 due to the adoption of Financial Accounting Standards Board Accounting Standards Update 2016-02, *Leases (Topic [removed: 842).*][added: 842)*.]

Merchandise Inventory [removed: -] [added: –] Vendor Funds [removed: -] [added: –] Refer to Note 1 to the financial statements

The Company receives funds from its vendors in the normal course of business, principally as a result of purchase [removed: volumes, sales, early payments or promotions of vendors’ products.][added: volumes and sales.]

In the fiscal year ended January [removed: 31, 2020,] [added: 29, 2021,] the Company purchased inventory from a significant number of vendors.

We identified vendor funds as a critical audit matter because of the [removed: number, complexity,] [added: volume] and [removed: diversity] [added: varying terms] of the individual vendor agreements.

[removed: | • |] [added: -] We tested the effectiveness of controls over vendor funds, including management’s controls over the accrual and recording of vendor funds as a reduction to the cost of inventory or cost of sales in accordance with the terms of the vendor agreements. [removed: |]

[removed: | • |] [added: -] We selected a sample of vendor funds and recalculated the amount earned using the terms of the vendor agreement, including the amount recorded as a reduction to the cost of inventory and/or the amount recorded as a reduction to cost of sales. [removed: |]

| [Note 2: Revenue](#i9842e66b35c94868bbc06decd778cbf4_136) | | | [48](#i9842e66b35c94868bbc06decd778cbf4_136) | | |

| [Note 7: Short-Term Borrowings](#i9842e66b35c94868bbc06decd778cbf4_169) | | | [54](#i9842e66b35c94868bbc06decd778cbf4_169) | | |

| [Note 9: Derivative Instruments](#i9842e66b35c94868bbc06decd778cbf4_217) | | | [56](#i9842e66b35c94868bbc06decd778cbf4_217) | | |

March 22, 2021

March 22, 2021

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| Net earnings | | | $ | 5,835 | | | | | 6.51 | | % | | | | $ | 4,281 | | | | | 5.93 | | % | | | | $ | 2,314 | | | | | 3.24 | | % |

| Cash flow hedges – net of tax | | | (79) | | | | | | (0.09) | | | | | | (22) | | | | | | (0.03) | | | | | | (1) | | | | | | — | | |

| Common stock – $0.50 par value: Authorized – 5.6 billion shares; Issued and outstanding – 731 million and 763 million, respectively | | | | | | 366 | | | | | | 381 | | |

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| Net earnings | | | — | | | | | | — | | | | | | — | | | | | | 5,835 | | | | | | — | | | | | | 5,835 | | |

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| Repurchases of common stock | | | (34) | | | | | | (16) | | | | | | (214) | | | | | | (4,721) | | | | | | — | | | | | | (4,951) | | |

| Balance January 29, 2021 | | | 731 | | | | | | $ | 366 | | | | | $ | 90 | | | | | $ | 1,117 | | | | | $ | (136) | | | | | $ | 1,437 | |

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| | | | Fiscal Years Ended | | | | | | | | | | | | | | |

| Other operating assets | | | 326 | | | | | | (364) | | | | | | (101) | | |

| Deferred revenue | | | 512 | | | | | | (15) | | | | | | 23 | | |

| Other operating liabilities | | | 813 | | | | | | (639) | | | | | | 414 | | |

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In response to the COVID-19 pandemic, federal, state and local governments put in place travel restrictions, quarantines, “shelter-in-place” orders, and various other restrictive measures in an attempt to control the spread of the disease.

Such restrictions or orders have resulted in, and continue to result in, business closures, work stoppages, slowdowns and delays, among other effects that impact the Company’s operations, as well as customer demand and the operations of our suppliers.

At the onset of the pandemic, the Company implemented a number of measures to facilitate a safer store environment and to provide support for its associates, customers and community.

During the first quarter, the Company expanded associate benefits in response to COVID-19 to provide additional paid time off, special payments to hourly associates, temporary wage increases and other benefits.

During the remainder of fiscal 2020, the Company provided additional bonus payments to hourly associates, in addition to continued enhanced cleaning protocols and charitable contributions.

| | |

| --- | --- |

| [Note 3: Acquisitions](#s4F04B867A06B5546900586FC0A6E35C4) | [53](#s4F04B867A06B5546900586FC0A6E35C4) |

| [Note 4: Investment in Australian Joint Venture](#s078FC50F9E9857EEACD70B050D463E86) | [54](#s078FC50F9E9857EEACD70B050D463E86) |

| [Note 19: Subsequent Events](#s369E250BAF1A513EA1037AF100E2B582) | [74](#s369E250BAF1A513EA1037AF100E2B582) |

March 23, 2020

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| Goodwill | | | 303 | | | | 303 | | |

| Common stock - $0.50 par value; | | | | | | | | | |

| Shares issued and outstanding | | | | | | | | | |

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| Balance February 3, 2017 | 866 | | | $ | 433 | | | $ | — | | | $ | 6,241 | | | $ | (240 | ) | | $ | 6,434 | |

| Repurchase of common stock | (40 | ) | | (20 | | ) | | (215 | | ) | | (2,939 | | ) | | | | | | (3,174 | | ) |

| Balance February 1, 2019 | 801 | | | $ | 401 | | | $ | — | | | $ | 3,452 | | | $ | (209 | ) | | $ | 3,644 | |

| Cash dividends declared, $2.13 per share | | | | | | | | | | | | (1,653 | | ) | | | | | | (1,653 | | ) |

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| Loss/(gain) on cost method and equity method investments | 12 | | | | 9 | | | | (82 | | ) |

| Other operating assets | (376 | | ) | | (110 | | ) | | 250 | | |

| Other operating liabilities | (654 | | ) | | 437 | | | | 137 | | |

| Acquisition of business - net | — | | | | — | | | | (509 | | ) |

Gross unrealized gains and losses were not significant for any of the periods presented.

However, the fair value of the Company’s derivative instruments and related activity were not material to the Company’s consolidated financial statements in any of the years presented.

| (In millions) | 2019 | | | | 2018 | | | | 2017 | | |

| 1 | *Goodwill recorded for 2017 acquisitions relates to Maintenance Supply Headquarters. See Note* *3* *for additional information regarding this acquisition.* |

The Company classified these fair value measurements as Level 3.

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Leases - Effective February 2, 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.

Lease commencement occurs on the date the Company takes possession or control of the property or equipment.

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.

In addition, no change in the Company’s internal control over financial reporting occurred during the fiscal fourth quarter ended January [removed: 31, 2020] [added: 29, 2021,] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Although most of our corporate employees are working remotely due to the COVID-19 global health crisis, we have not experienced a material impact to our internal control over financial reporting.

We continue to monitor the pandemic and its effects on the design and operating effectiveness of our internal controls.

The other information required by this item is furnished by incorporation by reference to the information under the headings “Proposal 1: Election of Directors”, “Corporate Governance”, and “Additional Information - Shareholder Proposals for the [removed: 2020] [added: 2022] Annual Meeting” in the definitive Proxy Statement for the [removed: 2020] [added: 2021] annual meeting of shareholders, which will be filed with the SEC within 120 days after the fiscal year ended January [removed: 31, 2020] [added: 29, 2021] (the Proxy Statement).

The full text of the Code can be found on our website at www.Lowes.com, under the “About Lowe’s”, [removed: “Investor Relations”,] [added: “Investors”,] and [removed: “Governance] [added: “Corporate Governance] - [removed: Code of Business Conduct and Ethics”] [added: Governance Documents”] headings.

| | | [added: | | | |] Page No. | [added: | |]

| | [added: | |] [Reports of Independent Registered Public Accounting [removed: Firm](#s85250D8085A2569293FBA2CDFB634D13)] [added: Firm](#i9842e66b35c94868bbc06decd778cbf4_100)] | [removed: [38](#s85250D8085A2569293FBA2CDFB634D13)] | [added: | [34](#i9842e66b35c94868bbc06decd778cbf4_100) | | |]

| | [added: | |] [Consolidated Statements of Earnings for each of the three fiscal years in the period ended [removed: January 31, 2020](#s9CBBD7F679195A928A8879D29210C073)] [added: January](#i9842e66b35c94868bbc06decd778cbf4_106) [](#i9842e66b35c94868bbc06decd778cbf4_106)[29, 2021](#i9842e66b35c94868bbc06decd778cbf4_106)] | [removed: [41](#s9CBBD7F679195A928A8879D29210C073)] | [added: | [37](#i9842e66b35c94868bbc06decd778cbf4_106) | | |]

| | [added: | |] [Consolidated Statements of Comprehensive Income for each of the three fiscal years in the period ended January [removed: 31, 2020](#s7F5030DAA6D258579147A894540A4E95)] [added: 29, 2021](#i9842e66b35c94868bbc06decd778cbf4_109)] | [removed: [41](#s7F5030DAA6D258579147A894540A4E95)] | [added: | [37](#i9842e66b35c94868bbc06decd778cbf4_109) | | |]

| | [added: | |] [Consolidated Balance Sheets at January [removed: 31, 2020] [added: 29, 2021] and [removed: February 1, 2019](#sB19D8035137F5482BF10AF8D94D70FA4)] [added: January 31, 2020](#i9842e66b35c94868bbc06decd778cbf4_112)] | [removed: [42](#sB19D8035137F5482BF10AF8D94D70FA4)] | [added: | [38](#i9842e66b35c94868bbc06decd778cbf4_112) | | |]

| | [added: | |] [Consolidated Statements of Shareholders’ Equity for each of the three fiscal years in the period ended January [removed: 31, 2020](#s134F7CE573195FE48BACC8614D42AD05)] [added: 29, 2021](#i9842e66b35c94868bbc06decd778cbf4_118)] | [removed: [43](#s134F7CE573195FE48BACC8614D42AD05)] | [added: | [39](#i9842e66b35c94868bbc06decd778cbf4_118) | | |]

| | [added: | |] [Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended January [removed: 31, 2020](#sB2FBD8508B18545F8326160E6AA4ED89)] [added: 29, 2021](#i9842e66b35c94868bbc06decd778cbf4_124)] | [removed: [44](#sB2FBD8508B18545F8326160E6AA4ED89)] | [added: | [40](#i9842e66b35c94868bbc06decd778cbf4_124) | | |]

| | [added: | |] [Notes to Consolidated Financial Statements for each of the three fiscal years in the period ended January [removed: 31, 2020](#s0F7FEAA00CAC5765907144C470227701)] [added: 29, 2021](#i9842e66b35c94868bbc06decd778cbf4_127)] | [removed: [45](#s0F7FEAA00CAC5765907144C470227701)] | [added: | [41](#i9842e66b35c94868bbc06decd778cbf4_127) | | |]

| (In millions) | [added: | |] Balance at beginning of period | | | | [added: | |] Charges to [removed: costs and] [added: costs and] expenses | | | | | | [added: | | | | | |] Deductions | | | | | | [added: | | | | | |] Balance at end of period | | |

| January 31, 2020: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| Reserve for loss on obsolete inventory | [added: | |] $ | 78 | | | [added: | |] $ | 27 | | | [added: | |] 1 | | [added: | | | |] $ | — | | | | | [added: | | | | | |] $ | 105 | |

| Reserve for inventory shrinkage | [added: | |] 222 | | | | [added: | |] 533 | | | | | | [removed: (511] | | [removed: )] | | [added: | | (511) | | | | | |] 2 | | [added: | | | |] 244 | | |

| Reserve for sales returns | [added: | |] 194 | | | | [added: | |] — | | | | | | [added: | | | | | |] — | | | | | | [added: | | | | | |] 194 | | |

| Deferred tax valuation allowance | [added: | |] 569 | | | | [added: | |] — | | | | | | [removed: (8] | | [removed: )] | | [added: | | (8) | | | | | |] 4 | | [added: | | | |] 561 | | |

| Self-insurance liabilities | [added: | |] 953 | | | | [added: | |] 1,711 | | | | | | [removed: (1,560] | | [removed: )] | | [added: | | (1,560) | | | | | |] 5 | | [added: | | | |] 1,104 | | |

| Reserve for exit activities | [added: | |] 361 | | | | [added: | |] — | | | | | | [removed: (273] | | [removed: )] | | [added: | | (273) | | | | | |] 7 | | [added: | | | |] 88 | | |

| February 1, 2019: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| Reserve for loss on obsolete inventory | [added: | |] $ | 77 | | | [added: | |] $ | 1 | | | [added: | |] 1 | | [added: | | | |] $ | — | | | | | [added: | | | | | |] $ | 78 | |

| Reserve for inventory shrinkage | [added: | |] 212 | | | | [added: | |] 478 | | | | | | [removed: (468] | | [removed: )] | | [added: | | (468) | | | | | |] 2 | | [added: | | | |] 222 | | |

| Reserve for sales returns | [added: | |] 71 | | | | [added: | |] 123 | | | | [added: | |] 3 | | [added: | | | |] — | | | | | | [added: | | | | | |] 194 | | |

| Deferred tax valuation allowance | [added: | |] 475 | | | | [added: | |] 94 | | | | [added: | |] 4 | | [added: | | | |] — | | | | | | [added: | | | | | |] 569 | | |

| Self-insurance liabilities | [added: | |] 890 | | | | [added: | |] 1,530 | | | | | | [removed: (1,467] | | [removed: )] | | [added: | | (1,467) | | | | | |] 5 | | [added: | | | |] 953 | | |

| Reserve for exit activities | [added: | |] 60 | | | | [added: | |] 384 | | | | | | [removed: (83] | | [removed: )] | | [added: | | (83) | | | | | |] 6 | | [added: | | | |] 361 | | |

| Reserve for loss on obsolete inventory | [added: | |] $ | [removed: 59] [added: 105] | | | [added: | |] $ | [removed: 18] [added: 77] | | | [added: | |] 1 | | [added: | | | |] $ | — | | | | | [added: | | | | | |] $ | [removed: 77] [added: 182] | |

| Reserve for sales returns | [removed: 71] | | [added: 194] | | [removed: —] | | | | [added: 58] | | [added: | | | | | | | | | |] — | | | | | | [removed: 71] | | | [added: | | | 252 | | |]

| Deferred tax valuation allowance | [removed: 578] | | [added: 561] | | [added: | | | | 40 | | | | | | | | | | | |] — | | | | | | [removed: (103] | | [removed: )] | | [removed: 4] | | [removed: 475] [added: 601] | | |

| Reserve for exit activities | [removed: 66] | | [added: 88] | | [removed: 19] | | | | [added: —] | | [removed: (25] | | [removed: )] | | [removed: 6] | | [removed: 60] | | | [added: | (19) | | | | | | | | | | | | 69 | | |]

[removed: |] 1 [removed: |] *Represents the net increase in the required reserve based on the Company’s evaluation of obsolete inventory.* [removed: |]

[removed: |] 2 [removed: |] *Represents the actual inventory shrinkage experienced at the time of physical inventories.* [removed: |]