Good morning, everyone, and welcome to Lowe's Companies Second Quarter 2011 Earnings Conference Call. This call is being recorded. [Operator Instructions]
Statements made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Management's expectations and opinions reflected in those statements are subject to risks, and the company can give no assurance that they will prove to be correct. Those risks are described in the company's earnings release and its filings with the Securities and Exchange Commission.
Also during this call, management will be using certain non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP financial measures and other information about them posted on Lowe's Investor Relations website under Corporate Information and Investor Documents.
Hosting today's conference will be Mr. Robert Niblock, Chairman, President and CEO; Mr. Bob Gfeller, Executive Vice President of Merchandising; and Mr. Bob Hull, Executive Vice President and CFO.
I will now turn the program over to Mr. Niblock for opening remarks. Please go ahead, sir.
Robert Niblock
Good morning, and thanks for your interest in Lowe's. Following my remarks, Bob Gfeller will review our operational performance, and Bob Hull will review our financial results. But first, let me share a summary of our second quarter performance, as well as how we're thinking about our near-term and long-term opportunities.
Despite some recovery from the first quarter in our seasonal business, our performance for the quarter fell short of our expectations. Sales for the quarter increased 1.3%, while comparable store sales were essentially flat to last year. Comp traffic increased 0.6% in the second quarter and comp average ticket declined 0.9%. Bob Gfeller will provide more details regarding our comp performance in a few minutes.
Gross margin contracted 37 basis points in the quarter. Our 5% off everyday offer for Lowe's consumer credit card holders impacted gross margin by 11 basis points. However, the gross margin impact of this offer was more than offset by leverage in tender and other costs associated with our proprietary credit program, which are components of SG&A. Bob Hull will provide more detail regarding gross margin in a few minutes.
We had good operating expense control in the quarter. However, as detailed in today's release, we recognized a charge associated with impairment of long-lived assets, including 7 stores that closed on August 14, which reduced pretax earnings for the quarter by $83 million and diluted earnings per share by $0.04. We generated substantial operating cash flow during the quarter, which allowed us to repurchase 59.7 million shares or $1.4 billion, exhausting our share repurchase authorization. Including the impairment charge, we delivered earnings per share of $0.64 in the second quarter.
Our second quarter consumer survey indicates that high fuel prices remain at the top of consumers' minds as they consider future spending plans. However, recent headlines regarding slowing growth and the U.S. credit rating downgrade underscored the continued weakness in the U.S. economy. The volume of negative news and the unsettling impact on equity markets is having a significant effect on already fragile consumer mindset.
More specifically with regard to home improvement spending, consumers continue to focus on small ticket, less than $500 repair and maintenance items and projects. Even after taking into account the challenge of the macro environment, we're still not pleased with our performance this year. For both do-it-yourself and commercial business customers, we must drive more trips, close more sales and build bigger baskets. So what are we doing about it?
Earlier this year, I restructured the executive team and together, we are looking at our business with a fresh perspective. We have critically evaluated our performance over the past several quarters and have identified some gaps. The gaps are in addition to convenience of store location, which we discussed in our first quarter earnings call. We have plans in place to address the gaps we've identified, but we also know that there is no silver bullet, and it's going to take time to see the full benefit of these changes. Bob Gfeller will discuss several of our near-term plans to compete more effectively in the current environment. He will also outline ways in which we will go to market differently beginning in the second half of this year.
We also remain focused on cost-efficient and effective operations. The management team is reviewing how we operate on a cross-functional basis to ensure consistent and connected execution, while also evaluating our organizational structure to streamline decision-making and ensuring that we have the right people in the right roles throughout the organization. We're making tough decisions in order to improve profitability, and I'm confident that the team is focused on the right areas and making the necessary decisions within the parameters of our longer-term strategy.
In ceramic tile, we are resetting 25% of every ceramic floor tile set replacing over 100 SKUs. Additionally, with wall tile sales gaining strength, this month, we have added 50 new SKUs across many stores. Why? Customers want more variety in color, style and size of tile as they freshen the look of their homes by completing bath makeovers and small tile accent projects in kitchens.
Now turning to inventory. We ended the quarter with roughly 2% more inventory than last year. We are comfortable with our inventory levels of grills, patio furniture and room air conditioners as we do not expect significant third quarter markdown pressure in connection with second quarter inventory levels.
That completes my review of second quarter performance and some category specific efforts to drive sales in the back half of 2011. Now I would like to more broadly discuss new directions for Lowe's merchandising.
As merchandising looks to attract customers to drive sales and margin dollar growth, we believe that we must present value to the customer every day, and we must differentiate ourselves by providing simple, fresh and innovative ideas and solutions. To the customer, value is price plus something more. It is that simple. So I want to take a moment to discuss how we are reinvigorating our efforts to enhance our price image in the eye of the consumer and to provide the extra something that distinguishes us from our competitors.
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