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 1,715 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.
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 Ltd., to develop a network of stores there.
Sales topped $50 billion in fiscal 2013 (ends January), up less than 1% vs. the prior year. Net income increased by nearly 7% over the same period. The retailer credited the slight uptick in sales in fiscal 2013 to a 1% increase in same-store sales. Fiscal 2012 marked the third consecutive year of sales growth for Lowe's, after two years of falling sales during the recession and housing crisis. 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.
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 five 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. Indeed, in October 2011 Lowe's announced plans to shutter 20 of its underperforming US locations and eliminate nearly 2,000 jobs. 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 Ltd., 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 believes that a significant portion of its anticipated store growth over the next five years will be in Canada and Mexico. It's also working to buy Sears spinoff Orchard Supply Hardware (OSH) in 2013 as part of a prepackaged bankruptcy. In mid-2013 Lowe's bid $205 million to buy about 60 of OSH's more than 90 stores. The move, which includes assuming debt incurred by OSH, will add to the 110 stores that Lowe's already operates in California.
Mergers and Acquisitions
Lowe's is not a particularly acquisitive company, preferring to build its own stores rather than buy them. However, in late 2011 the company made its first purchase in almost 12 years when it bought online home-improvement retailer ATG Stores based in Kirkland, Washington. The purchase added online retail expertise to Lowe's operations. Lowes.com accounts for less than 2% of the company's sales.