For years the image of this industry, held by experts as well as outsiders, was simply summed up by the plight of its two dominant national chains, Home Depot and Lowe\u2019s.\u00a0 These two behemoths have ranked nos. 1 and 2 seemingly forever, or at least since the years shortly after Home Depot\u2019s birth in 1976.\u00a0 Surely there is a lot more to this industry than can be seen through the trials and tribulations of its two most celebrated retailers but to many the industry is most easily addressed by these two Wall Street perennials.<\/p>\n
For years Home Depot was the adventurous aggressor.\u00a0 Lowe\u2019s was the cautious planner.\u00a0 As Home Depot experimented with additional new formats through the years, Lowe\u2019s simply held the line and systematically expanded on its base.<\/p>\n
Early during this period Home Depot decided to open a Farm & Home chain under its umbrella and surprised analysts by closing the chain down rather suddenly.\u00a0 After delivering impressive presentations on the viability of its fledgling test of traditional home center sized hardware stores, the company shocked admirers as it suddenly shuttered the concept.\u00a0 All the while Lowe\u2019s continued on its gradual journey to expand its considerable footprint both in store size and market locations.<\/p>\n
When Home Depot\u2019s founders decided it was time to explore new personal opportunities, they turned the company over to a CEO from outside the company whose management style was even more aggressive.\u00a0 Plans called for a vast and costly expansion of its EXPO Design concept as the company went on an unprecedented spending spree, acquiring notably successful independent and regional pro dealers.\u00a0 To help afford these investments the company went on a frugality binge by cutting payroll in part by replacing knowledgeable industry veterans with bodies on store selling floors.\u00a0 The company also moved customer service call centers to India.<\/p>\n
Meanwhile Lowe\u2019s indicated it was as determined as ever to stay its course.\u00a0 This included well planned, methodical incursions into Canada and Mexico.\u00a0 While Home Depot had previously entered both countries largely through rapid acquisitions, Lowe\u2019s remained cautious, waiting years before setting up its own exploratory teams respectively within each country to build Lowe\u2019s-style operations from the ground up.<\/p>\n
When the subprime crisis hit the fan, the Home Depot acquisitions and the company\u2019s aspirations to be all things to all customers became too much to handle.\u00a0 Those responsible for the changes in the company\u2019s basic makeup were unceremoniously purged.\u00a0 The pro dealer acquisitions were quickly sold off for far less than their original costs and several non-traditional store concepts including as its EXPO Design Centers were suddenly abandoned as new management sought to return the company to its once much admired original platform and core values.<\/p>\n
At this point, though most of the industry suffered the faults of the national economy, Lowe\u2019s seemed poised to avoid the degree and extent of the problems facing Home Depot.\u00a0 By maintaining its DIY roots Lowe\u2019s didn\u2019t face the catastrophe Home Depot experienced as mounting foreclosures and a glut of unsold new homes hit builders far more than any other industry segment and rendered Home Depot\u2019s acquisitions almost as anchors on a sinking ship.<\/p>\n
However Home Depot\u2019s new management accepted its losses almost as aggressively as it had acquired them.\u00a0 Under a sure handed management style led by Francis Blake the company aggressively returned to its roots, eagerly hiring very qualified associates, a venture made easier by the totality of the recession and the difficulty of many professionals to find desirable and gainful employment.<\/p>\n
All this leads us to the state of the battle between these two companies today.\u00a0 After experiencing a host of problems brought on by a few years of questionable management focus, Home Depot just announced a third quarter sales gain of 2.9% as the company posted a 4.2% comp-store sales increase.\u00a0 Even bigger growth was reported as net earnings showed a 13.0% increase.\u00a0 Here Mr. Blake attributed the third quarter successes as driven by strength in the company\u2019s core categories while noting a surge in storm-related sales as well as strong operating performance.\u00a0 Clearly the company has successfully returned to its roots.<\/p>\n
Meanwhile Lowe’s reported that net income for its recently ended quarter dropped 44% as store-closing charges undercut a slight increase in quarterly sales.\u00a0 Net earnings of $225 million were reported, compared with $404 million in the year-ago period. \u00a0Clearly the picture for Lowe\u2019s based on these numbers is hopeful at best as President and CEO Robert A. Niblock, indicated that the company\u2019s recent performance did not meet expectations even considering recession based market conditions.\u00a0 He stated that Lowe\u2019s is, \u201cMaking the changes necessary to right size the organization, improve speed to market and enhance the shopping experience.\u201d<\/p>\n
In an effort to improve profitability, Lowe’s recently shuttered 20 stores, announced that the company is reducing the rate of future openings and is restructuring its store and merchandising organizations.\u00a0 This as Home Depot announced that its board of directors declared a 16% increase in its quarterly dividend to 29 cents per share.<\/p>\n
As if this news is not enough to worry Lowe\u2019s Wall Street fans, as mentioned in this space late last year, Lowe\u2019s announcements of its store closings were handled clumsily at best as workers in some cases were notified on a Saturday night not to return starting the very next morning.\u00a0 Press announcements were also awkward. \u00a0These met with scorn from workers as well as customers.\u00a0 Politicians chimed in from many levels.\u00a0 Both the local and national press followed up on the questionable details and cable news expanded the intensity and life of the story.<\/p>\n
What soon followed Lowe\u2019s in the media caused even greater controversy, if that was possible.\u00a0 Bowing to pressure from the Florida Family Association, a conservative Christian group, Lowe’s decided to end its advertising campaign on the TLC show “All-American Muslim”.\u00a0 The cancellation announcement created a media stir that only served to fan its own flames.\u00a0 Several religious, ethnic, consumer and political demanded Lowe\u2019s withdraw its cancellation while others backed Lowe\u2019s decision.\u00a0 Ultimately Lowe\u2019s decided that backing down a second time to reverse the decision would seem weak and waited for the storm to subside on its own.\u00a0 The company received over ten thousand hits on its Facebook page both supporting and denouncing its decision.<\/p>\n
For the many who view this industry first through the trials of its two national retail powers, 2012 should prove interesting indeed.\u00a0 There is no telling where this economy will take us and this industry is currently affected more by economic turns than most.\u00a0 As Home Depot and Lowe\u2019s are national in scope they lose the advantage that some independents and regionals have as they plot against specifically local turns.\u00a0 Lowe\u2019s has traditionally been the sure and steady national presence of the industry.\u00a0 How times have recently changed.<\/p>\n","protected":false},"excerpt":{"rendered":"
For years the image of this industry, held by experts as well as outsiders, was simply summed up by the plight of its two dominant national chains, Home Depot and Lowe\u2019s.\u00a0 These two behemoths have ranked nos. 1 and 2 seemingly forever, or at least since the years shortly after Home Depot\u2019s birth in 1976.\u00a0… Continue reading Home Depot vs. Lowe\u2019s: a Brief Update<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"post-template-no-sidebar.php","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10],"tags":[5],"class_list":["post-247","post","type-post","status-publish","format-standard","hentry","category-home-hardware","tag-insight","entry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts\/247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/comments?post=247"}],"version-history":[{"count":0,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/posts\/247\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/media?parent=247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/categories?post=247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chainstoreguide.com\/offthechain\/wp-json\/wp\/v2\/tags?post=247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}