Lowe’s (LOW, $100.40) identifies three key areas to upgrade business performance
In an ever-changing retail landscape, home improvement giant Lowe’s Companies (LOW) managed to deliver impressive Q4 result that saw its sales grow to $15.6 billion, a 1% y-o-y increase, and adjusted earnings per share (EPS) rising to $0.80, an 8.1% y-o-y increase. However, this is not a definitive success as the company still has to figure out how to stay relevant in the changing demand landscape.
CEO Marvin Ellison has identified three key areas that must be improved for an overall success: taking care of the Pros, taking care of the digital sales, and finally taking care of delivery.
In the retail industry, Pro customers are defined as those in the construction trades or the maintenance, repair, and operations industry. These customers are more important as they make more frequent and expensive visits versus DIY customers working on weekend projects. Capturing a sizeable share of its Pro customer market is key to Lowe’s future performance. For this, the company has planned to dedicate loaders to exclusively serve Pro customers, so any bulky products they purchase can be loaded quickly and efficiently at the store.
Although Lowe’s online sales rose 11% y-o-y in Q4, it is still lower than Home Depot’s (HD) online sales which rose 24% in the same period. To address this problem, Lowe’s plans to make their website more user-friendly, to place associates online and to work more intimately with vendors to enable better product selection.
Finally, Ellison acknowledged the need to upgrade its delivery and logistics infrastructure. The company is currently planning to develop a network of distribution centers and systems that will centrally help to manage bulk deliveries to customers’ homes and job sites more efficiently. The company just opened its first direct fulfillment center and has plans to open a second on the West Coast.
