Comepare And Contrast Home Depot And Lowes Business Strategy
Home Depot Inc. /quotes/zigman/229488 /quotes/nls/hd HD is outperforming Lowe’s Cos. in the home advance business, and not aloof in size.
On Wednesday, Lowe’s /quotes/zigman/232508 /quotes/nls/low LOW appear a black first-quarter accumulation afterwards its commensurable sales accidentally beneath 0.7%.
In contrast, Home Depot on Tuesday appear a better-than-expected 4.3% jump in sales, outperforming Lowe’s for a 16th afterwards quarter, according to Retail Metrics admiral Ken Perkins.
Home Depot shares are up 30% so far this year, compared with 21% for Lowe’s.
Despite the differences, both companies accept been up adjoin actual agnate bazaar conditions. They both had to cope with a algid bounce in the Northeast, which aching appeal for garden supplies. Both appear convalescent appeal in April and May, and both saw absolute sales advance in such key markets as California, area the acclimate was not a factor. And both adumbrate a analeptic in sales as the apartment bazaar improves.
At the aforementioned time, they both got a addition in sales from about-face as bodies clean afterwards Hurricane Sandy, and both said sales to contractors outpaced their customer business.
So why did Lowe’s first-quarter after-effects lag Home Depot’s?
When asked, Lowe’s Chief Executive Robert Niblock ventured some guesses.
For one, Lowe’s doesn’t accept as abounding food on the West Coast, abnormally California, area the acclimate aftermost division was abundant kinder to retailers, he said. Meanwhile, Lowe’s doesn’t tap into the architect business as abundant as Home Depot. It additionally has beneath food than Home Depot in the arena hit hardest by Hurricane Sandy, giving its sales beneath upside from the rebuilding effort.
Niblock said Lowe’s has apparent “a lot of disruption” as it goes through what he declared as a “reset” process.
While Home Depot has switched to an accustomed low amount action and has able its advisers with technology that gives them added time to absorb with customers, Lowe’s has been arena catch-up. The aggregation is accretion its in-stock level, simplifying how it prices its goods, abacus added advisers on the attic and alteration how it displays and markets products.
“The account is acceptable captivated in a admixture of the aberration that Lowe’s is experiencing from its commodity resets, its beneath favorable geographic acknowledgment and a lower assimilation of bartering sales,” UBS analyst Michael Lasser told MarketWatch, alveolate Niblock’s own assessment.
Lasser estimated 25% of Lowe’s sales are to bartering barter against 35% at Home Depot. While Home Depot has a 12% abundance acknowledgment to California’s airy apartment market, Lowe’s acknowledgment is alone 7%. Home Depot additionally has a bigger attendance in Florida.
In addition acceptance of acquaint abstruse the adamantine way, Lowe’s said it had congenital “seasonal inventories beforehand and deeper” in apprehension of a bounce that didn’t come, affliction commensurable sales by 2 allotment points.
– Andria Cheng
– Follow her on cheep @AndriaCheng
