No longer a low-profile company, Lowe's Companies has evolved from a regional hardware store operator into a nationwide chain of home improvement superstores bent on international expansion. The #2 US home improvement chain (after The Home Depot), Lowe's has about 1,835 superstores in 50 states and some 40 locations in Canada and Mexico, as well as an e-commerce site. Its stores sell some 40,000 products for do-it-yourselfers and professionals for home improvement and repair projects, such as lumber, paint, plumbing and electrical supplies, tools, and gardening products, as well as appliances, lighting, and furniture. Lowe's is the second-largest US home appliance retailer after Sears.
In addition to its namesake chain, Lowe's holds a majority stake in Orchard Supply Hardware (OSH), which operates more than 70 neighborhood hardware and backyard stores (primarily in California). It took control of Orchard in 2013. The move, which included assuming debt incurred by OSH, added to the 110 stores that Lowe's already operated in California.
Outside the US, Lowe's has stores in Canada and Mexico. Since entering Canada in 2007, Lowe's has grown to number more than 30 stores there. It currently has five locations in Mexico. Lowe's also has a joint venture in Australia with Woolworths to develop a network of stores there.
Sales and Marketing
Lowe's offers flooring, millwork, and appliance installation through independent contractors. Installed sales accounted for approximately 7% of sales in fiscal 2014. Online sales, through websites including lowes.com and lowes.ca, accounted for another 2% of total sales.
The company has reported stable growth over the past five years; it had experienced falling sales during the recession and housing crisis. In fiscal 2014 (ended January), revenue increase 6% to $53.4 billion, versus $50.5 billion in fiscal 2013. Increases in comparable average tickets led to a 5% rise in comparable sales that year; all product categories performed strongly in 2014. That growth has also led to an increase in profits, which rose 17% to $2.3 billion in fiscal 2014. Despite the sales reversal, Lowe's has kept its expansion plans conservative, adding only nine new outlets in 2013. Going forward, the company revised its new store opening schedule to only 10 locations per year, down from a previous target of 30.
Cash flow from operations rose 8% to $4.1 billion in fiscal 2014, largely due to the rise in net income.
The slower pace of store openings reverses the trend at Lowe's, which grew its store base by more than 50% since 2005. The company typically concentrates on small and midsized markets, but it also targets large metropolitan areas (with populations of 500,000 or more). Lowe's, which entered Canada seven years ago, sees potential in the North American market for up to 2,500 locations, but the economic downturn slowed its progress on making that a reality. However, Lowe's still believes that a significant portion of its anticipated store growth over the next few years will be in Canada and Mexico.
Beyond North America, Lowe's has set its sights on the land down under. Through a joint venture formed in 2009 with Australia's top retailer, Woolworths, Lowe's owns a one-third share in 23 DIY stores under the Master banner there. To drive sales, Lowe's is trying to differentiate itself from its rivals by forming strategic partnerships with select suppliers, including GE (appliances), Stainmaster (carpets), and Pella (windows), to offer brand-name merchandise in its stores. It's also trying to attract more female customers, who, the company claims, call the shots on about 80% of home improvement decisions. To make its big-box stores appealing, the company makes effective use of lighting and signage and caters to women and baby boomers with an attractive store layout. The retailer has also increased the number of sales representatives working the floor on weekends, its peak shopping period.
Lowe's Innovation Labs works to improve the retailer's customer experiences. In 2014 it introduced the first of its Holoroom concept, which offers 3-D and augmented reality home improvement simulations. In another innovation launched that year, it introduced two retail service robots to help assist customers in an OSH store.
In 2013 the company launched a dedicated fleet of natural gas-powered trucks at its regional distribution center in Mount Vernon, Texas. Lowe's is among the first retailers to utilize such a fleet; the company expects to reduce greenhouse gas emissions by nearly 20% through the effort.
Mergers and Acquisitions
Lowe's is not a particularly acquisitive company, preferring to build its own stores rather than buy them. However, in 2013 the company acquired a majority stake of California-based Orchard Supply Hardware (OSH) as part of a prepackaged bankruptcy. Lowe's continues to operate OSH as a separate, standalone business.