Lowe’s Cos. is raising $2 billion in the bond market to finance stock repurchases as the second-biggest U.S. home-improvement retailer boosts leverage to reward shareholders even as its profitability wanes.
Lowe’s sold five-, 10- and 30-year debt yesterday, five months after the company that sells products from flowers to washing machines issued $1 billion of notes. The retailer may use proceeds to buy back shares, according to a regulatory filing. Lowe’s plans to increase its leverage to as much as 2.25 times from 1.8 times, Robert Hull, Lowe’s chief financial officer, told an earnings conference call in November.
Confidence among U.S. homebuilders fell in April to a three-month low, a sign the industry is still trying to gain its footing as the country recovers from the worst financial crisis since the Great Depression, the National Association of Home Builders/Wells Fargo index of builder confidence showed yesterday.
Lowe’s posted a ratio of Ebitda to interest expense of 9.13 in its fiscal 2012 fourth quarter, Bloomberg data show. That’s down from 11.09 in the similar period a year earlier.