Lowe's gives itself a makeover

The company is trying to compete more strongly with Home Depot, especially in Canada.

By Trefis Apr 10, 2012 4:58PM
Image: Woman Using a Spirit Level on a Sink in a Domestic Bathroom (© Alex Wilson/Digital Vision/Getty Images)Lowe's (LOW), eager to expand in Canada, has expressed an interest in acquisitions -- which brought its Canadian rival Rona into the spotlight last week as a potential take-over target.

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 Stock Break-Up

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 Number of International Stores

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.

Apr 10, 2012 9:30PM
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?
Apr 11, 2012 9:00AM
lowes and home depot used to hire retired trades people who new what they were talking about now they dont pay enough and the people they do hire are not informed enough to know what you are talking about when you ask a question
Apr 11, 2012 2:06PM
Hire peaople that have a clue as to what they are doing.
Apr 10, 2012 10:57PM
Maybe all you Lowe's customers should come to northern Illinois and and try the store near me. I can't walk from one side of the store to the other without 10 employees asking me if I need help finding anything. Checking out is also a pleasure and always with a "thank you." I also receive a 10% discount every time I remember to show them my veteran's ID card.
Apr 10, 2012 9:55PM
I like Lowes better than Home Depot.  They just need more locations.
Apr 11, 2012 8:12AM

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.

Apr 11, 2012 1:06PM
I worked in the trades for over 25 years, and then worked at the big orange box.  I loved it when a guy would send his wife into the store for hardware...because he had no idea what he needed and wasn't man enough to ask for help.  The poor wives did the best they could, and so did I.  However, there were times when we sent Mama home with the wrong thing, and the husband would call to complain that we didn't know what we were doing.  If the husband had come in to the store in the first place, the outcome was more likely to be successful.  Of course, his "Mr. Fixit " ego might have been a little bruised because he didn't know XXXX from Shinola, but it sure would have saved a lot of time and energy.
Apr 11, 2012 3:24PM
Lowe's has better selection, better deals. Depot always seem dirtier and I can never find anyone to help me
Apr 11, 2012 10:32AM
I don't know if this is a new company policy, or just a new manager at the Carrollton, Tx Lowe's, but now all employees have smiles on their faces and it seems that in every dept., someone is there to ask if I need help in finding anything. What a pleasant change from a few years ago when an employee would run and hide if they saw a customer in need.
Apr 10, 2012 9:46PM
They better step up their game.  Several years back, I owned a modest amount of HD stock and got to a point where I swore I'd never go back into one of their stores again, I was so disgusted by the lack of customer service, lazy, lackadaisical (and scarce) employees, out-of-stock items for months, etc.  I dumped my shares (at a nice loss) and defected to Lowe's.  In the last 18 months, Lowe's where I live looks like the HD of a few years ago.

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.

Apr 11, 2012 3:57PM
Lowes is heads above HD.....HD's are usually disorganized and filthy....no one helps you in fact they ignore you...if the see you coming to ask a question they head the other way.....and I'm a GC....better deals at Lowes especially for contractors.....
Apr 11, 2012 10:20AM
I  have shopped both HD and lowes but our lowes store here in sullivan,mo has always above and beyond to help us with every home project we have done. they have always been true professionials from their managers to the person loading my materials. i will always shop lowes because it is truely this familys home store. thanks to all the people at sullivan lowes for all your great help keep up the outstanding work.  the Hartman family
Apr 11, 2012 1:47PM
Wow sounds like a bunch of people need new jobs. I have been in the trades for 35 years and have more unwanted poor advice from people who work at both Lowes and Home Depot. They aren't concerned with getting the job done right at the lowest cost but getting you to buy what they have in their stores weather or not it will work for what you want. Found it better to get what I want at local small suppliers and leave both the overpriced Big Box stores to fight it out with people who don't know better.
Apr 11, 2012 1:19PM
x1134x, aren't you the guy who came in looking for a "left handed" hammer when your wife couldn't find one?
Apr 11, 2012 7:37AM

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?


Apr 11, 2012 1:16PM
Hey x1134x, that must have been your wife who came into the store for you.  I remember you.  You're the guy who would argue with me about the "right" way to do something...even though you had absolutely no experience.  No amount of information would keep you from knowing better than I did about how to do something.  I was always happy to send you home with what I knew to be the wrong thing.  You deserved it.  Next time, leave your fragile ego at home, you are a lot more likely to go home with what you actually need.
Apr 11, 2012 3:20PM
x1134x, go to the damn store yourself and stop sending your wife to pick up your stuff.  You know what you want.. go get it your self!  Of course every business has lazy people that don't know what they are talking about.. or those that are still training, but most of these people do the best that they can.  They work just like most americans and can't afford to try every product Lowe's or Home Depot offer... so bare with them.. they are there to help you not know everything there is to know about that department.. they are only paid slightly over minimum wage! If you want an expert in the field then go pay for one!
Apr 11, 2012 7:50AM
I've tried Lowe's, Home Depot, and Menards. I shop exclusively at Menards now because of lower prices, better service, wider selection and customer service.

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.

Apr 11, 2012 11:20AM
Lowes is great' I remodeled my house and everything came from Lowes. I was impressed with their delivery service and the fact that they have just about anything you can name for a fair price.
Apr 11, 2012 12:20PM
Yesterday, every single customer that walked into my department were horrible. Every one demanded that I walk away from the customer I was currently helping and when I explained that they had to wait their turn, they all demanded a manager to complain about my terrible customer service. I had an older man call me a stupid idiot all because I have not used every toilet bowl cleaner we carry and therefore I am not even close to qualified to work in the department.

And do you have any idea hoe many of the Cashiers and other employees are college educated but can't get a job in their field!?!?!? One of my coworkers has a MASTERS in Forensic Sciences, but can't find a job so she's working PART TIME and trying to pay on her loans. I have a BACHELOR'S and stuck PART TIME because I don't have in field experience.

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