Fitch Initiates Coverage Of Lowe's; Sr Debt Rtg `A' & CP Rtg `F1'.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 22, 2001

Fitch assigns Lowe's Companies, Inc. a senior unsecured debt rating of `A' and a commercial paper rating of `F1'. The Rating Outlook is Stable.

The ratings reflect Lowe's solid financial performance and credit

indicators, strong position in a highly fragmented home improvement market, efficient distribution system, customer friendly store format, and well-regarded management team. Moreover, the ratings rely on the maintenance of a financial policy that preserves credit protection measures. Going forward, financial performance and credit indicators are expected to remain at comfortable levels for the rating categories.

The highly fragmented home improvement market affords Lowe's the opportunity to continue to take market share from less efficient competitors. Over the next few years, the home improvement market is expected to grow faster than the economy as a whole. In the near term, the home improvement market has been negatively affected by the weaker economy. This impact, however, has been tempered by continued strength in the housing market. In particular, strong home re-sales continue to stimulate spending on home improvement projects and associated products.

Given favorable long-term industry dynamics, Lowe's continues to expand its store base aggressively. In the current fiscal year, Lowe's expects to open 115 new stores, following the opening of 100 new stores in fiscal year 2000. Managing this expansion program is a potential longer-term concern. However, Lowe's management closely monitors the performance of new stores and the company's overall financial leverage. If financial trends of new stores started to weaken materially, management would likely curtail expansion plans. To date, performance of new stores has remained solid. To management's credit, Lowe's has already demonstrated the ability to successfully expand into major metropolitan markets.

Lowe's, headquartered in Wilkesboro, North Carolina, is the second largest retailer of home improvement products with 680 stores nationwide. Lowe's market share is about 5% of the home improvement market.