Lowe's gives itself a makeover
The company is trying to compete more strongly with Home Depot, especially in Canada.
With Rona, the home-improvement chain could better compete with Home Depot (HD), which currently has six times the number of stores in Canada that Lowe's does. However, Rona has declined any interest for sale.
Lowe's has underperformed Home Depot in the past three years, but is trying to turn that around with a new branding campaign and more focus on online sales, in-store technology and efficiency initiatives. We expect its makeover to start transforming into results this year.
Lowe's eager to expand in Canada
Despite the huge opportunity for big-box home improvement retailers in attractive international markets, Lowe's lags well behind Home Depot in terms of presence outside the U.S.
Lowe's currently has only 30 stores in Canada compared to Home Depot's 180. Lowe's itself sees an opportunity for at least 100 stores across Canada, which makes the country's largest home improvement retailer Rona, with its 58 big box stores, an interesting acquisition target for Lowe's. Rona's shares jumped 12% with the news but retreated as it declined any interest.
Lowe's aims for higher market share
Lowe's has underperformed Home Depot in the past three years, but recently turned proactive with organizational restructuring, cost-cutting and efficiency initiatives from in-store technology to online sales. It's also closing 20 under-performing stores. It launched a new branding campaign last October to re-position itself with the tagline "Never Stop Improving" from the earlier "Let's Build Something Together." Its recent initiatives also include a shift away from promotions to everyday low prices in an attempt to capture market share.
It launched an online tool, "MyLowes," in October with features to lure and engage new and existing customers and boost web sales. It also acquired an online home improvement and lifestyle products retailer, ATG Stores, to expand its presence in the online retailing platform. ATG carries 3.5 million products, and will double the products on MyLowes.com this year. Lowe's expects its online sales to generate 5% to 10% of its sales over the next five years, from the present 1%.
With improvements in housing sentiment and proactive restructuring and efficiency initiatives, Lowe's stock has gained over 50% over the past six months. With no drastic improvements expected on housing or employment this year, it has been trying to diversify revenue streams through online sales and strengthening seasonal and maintenance and repair segments. We believe that Lowe's will improve its market share and operating margins over the next few quarters, and we think the market has priced in the upside in Lowe's stock.
We have a $31 Trefis price estimate for Lowe's stock, almost in line with the current market price.
if lowes was really interested in ousting home depot in the u.s. they would start a campaign selling products made in the usa. everything they sell is cheap chinese made junk that either does not work right or work at all.And this is different from the Home Depot model how?
I have had good experiences with Lowes, Home Depot and Menards, and sometimes I can't find anyone to help me at any of these stores. Just like any other business these days...they have to make cuts where they feel is necessary to compete. I just make sure to show my appreciation to the employee's that excel in their job...because I think that encourages them to do their best.
HD, on the other hand, figured it out on the ground level, at least where I live. The idiot executive mgmt finally got a clue and quit trying to value engineer the company out of business in attempt to improve "quarterly profits.". Instead, they just about augered the company into the ground.
I actually asked for the manager of a store last year and complimented her on how much things had changed for the better, keep it up, it's making a difference, etc. And suggested she pass on the feedback up the ladder to 'corporate,' in case they got any more brilliant ideas to cut customer service.
Lowes in Iowa have employees that know what they are talking about. I know when I go to Lowes, I'll find what I'm looking for at a competitive price. I'm just not a Home Depot fan and Menards just seems to have cheap stuff. Not inexpensive stuff. Cheap stuff. There is a difference. Groceries and clothes in a lumber yard?
First, HD has gone out of business in my town from severe lack of "all of the above" My wife and I went to an advertised 50% off all outdoor plants, trees, and shrubs sale. When we got there we figured out pretty quick the reason for the sale. EVERYTHING was dead! Nice of them to whack off 50% dead stuff, combine that with the water we'd save and WOW what a deal!
Lowes is just ok...higher prices, ok selection, ok service, terrible checkout...usually only 1 lane open.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The photo-sharing site only has 10 employees, and it may be up for grabs.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.