Tags: lowes | home improvement | retail

Lowe's Lays Plans to Boost Sales; Eyes Acquisitions

Tuesday, 03 Apr 2012 04:18 PM

Lowe's Cos Inc , the world's second-largest home improvement chain, is working on its own home project.

After underperforming larger rival Home Depot Inc on same-store sales for 11 straight quarters, Lowe's is now investing in everything from in-store technology to its online business to win back shoppers from the industry leader.

"We recognized that a lot of our ills aren't just housing-related or macro-related, (but) just some things we needed to fix ourselves," Robert Hull, who has served as Lowe's chief financial officer since March 2003, told Reuters on Tuesday.

 

Hull said Lowe's online business, which accounted for about 1 percent of total sales in 2011, could easily account for 5 to 10 percent of sales in five years. The company, which recently bought online home-goods chain ATG Stores, said there was potential for more acquisitions to boost that business.

"Everything we did (in the past) was store-centric. Today, we are all about the customer. So, it's about meeting the customer on their terms, no matter how they choose to interact with Lowe's: whether it is in their room, at their jobsite, on the phone or on the Web," Hull said.

Hull also sees opportunity for the retailer to expand further in Canada and have a total of about 100 stores there, up from 31 now, which are mostly in Ontario.

Hull said he was open to "all options" when asked about Lowe's interest in buying Canadian rival Rona Inc, if that chain puts itself up for sale.

Some investors said late last year that it made sense for the two chains to get together to better fight Home Depot.

He called Rona a "very interesting company" and said it had many attractive qualities like its footprint in Quebec, a market where Lowe's has hardly any presence at the moment.

Rona was not immediately available for comment.

Rona's shares rose 12.2 percent to C$10.49 on the Toronto Stock Exchange. Lowe's shares closed down 1 percent at $31.07 on the New York Stock Exchange on Tuesday.

Rona, once Canada's dominant do-it-yourself chain, has fared poorly as Lowe's and Home Depot have made deeper inroads in the country. Same-store sales fell 7.3 percent in the fiscal year ended Dec. 25, 2011.

The company said on Feb. 23 that it was shifting its focus from big-box stores, and would close or reduce the size of 23 outlets in a push to stay competitive in a more crowded market.

 

EXTREME MAKEOVER

In October, Lowe's said it was closing 20 of its U.S. locations and eliminating nearly 2,000 jobs, and slashing its store-opening plans to improve profitability. It laid off about 1,700 middle managers across the United States in January 2011, and also trimmed the number of its U.S. regions and merchandising units.

Hull, who expects Lowe's recent makeover to start bearing fruit in 2012, said seasonal products have sold well so far this spring, partly due to the warmer-than-usual weather.

One of the warmest U.S. winters on record prompted many homeowners to take up renovation projects earlier than usual this year, helping Lowe's and Home Depot to report strong sales in the fourth quarter as well.

Lowe's recent initiatives include a shift away from promotions to more everyday low prices. It has also started offering more localized products and made its stores more appealing with improved signs, new television displays that stream videos to educate shoppers on how to do projects, and lower racks to make some items easier to reach.

Online, Lowe's launched mylowes.com in mid-October, a site that allows shoppers to save their room dimensions, create a shopping list and set reminders for recurring items such as air filters and batteries for smoke alarms.

It also increased its assortment of products online and will keep adding to that assortment, said Robert Gfeller, who was named executive vice president of merchandising in January 2011.

During a tour of Lowe's store in East Rutherford, New Jersey, Gfeller highlighted how the company is now placing many new products, such as Broan bath fans and recessed-to-pendant light conversion kit, right at the front of the aisle to catch the attention of shoppers.

"We are trying to push out ahead of the customer, out ahead of the season to be seen as differentiated in the marketplace, in a way that we really haven't been," Gfeller said.

© 2017 Thomson/Reuters. All rights reserved.

   
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2012-18-03
Tuesday, 03 Apr 2012 04:18 PM
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