Can Lowe’s overtake Home Depot’s top spot?
Where do you shop for home improvement projects? For many Americans, more and more, the answer is Lowe’s (NYSE: LOW). Home deposit (NYSE: HD), a Dow Jones Industrial Average making up and America’s largest home improvement retailer, has benefited tremendously from recent positive home improvement trends. But competitor Lowe’s did even better and is on his heels for the top spot. Can Home Depot keep its lead or risk being overtaken by Lowe’s?
Why Home Depot should be concerned
The Home Depot has been the leading home improvement chain for decades, being the first to establish and expand its big box stores in the United States. Annual sales reached over $ 110 billion in 2019, an increase of 2% from the previous year. The company is admired for being solution-oriented and agile, and as it helps people across the country with do-it-yourself construction projects, sales continue to grow.
Lowe’s is smaller than Home Depot in terms of number of stores and sales, and was struggling before Marvin Ellison joined the CEO role in 2018. He laid out a plan to turn the business around and it is starting to take shape. .
As late as February of this year, Lowe’s had an inadequate digital program, far behind Home Depot, and almost all of its growth came from stores. But it gave the company great leverage, because as soon as it invested in a digital overhaul, sales exploded. The huge increase in the second quarter was fueled by a digital peak of 135%.
Lowe’s is making all kinds of improvements through its core retail strategy. It overhauled its website and mobile app and moved to the cloud. Over the next year and a half, it plans to open a large number of distribution and distribution centers. She recently launched a professional tool rental program and is focusing on the pros with a new loyalty program. It is also investing in the renovation and modernization of stores. And he’s already # 1 in some categories. The company recently announced that it is launching Locker Pickups, an innovation that The Home Depot launched two years ago.
Lowe’s sales for fiscal 2019 were $ 72 billion compared to Home Depot’s $ 110 billion, but second-quarter 2020 profits were getting closer, with a 34% increase in sales over the increase in 23% from Home Depot.
|Metric||Q2 2020||Q1 2020||Q4 2019||Q3 2019|
|Compos Home Depot||23%||6%||5%||3%|
|Digital Home Depot||100%||80%||21%||22%|
How Home Depot keeps its lead
Home Depot has an eye on the future, and this has led to its multi-billion dollar investment in its One Home Depot strategy. This is intended to integrate all aspects of business operations for a seamless shopping experience. This digital and distribution overhaul has had an impact on its revenue in the short term, but in the long term it has already paid off with great victories during the pandemic. And that means the best home improvement retailer has a lot more up its sleeve.
The company recently announced the opening of three new distribution centers in Georgia to meet more customer needs and replenish products faster in stores, as well as a delivery-focused center to route orders to stores. customers faster. It is also working to streamline brands in different categories to simplify customer purchases.
Home Depot has 2,293 stores in the United States, Mexico and parts of Canada. Lowe’s is just behind, with over 2,200 stores. Home Depot still has a comfortable lead in terms of sales, with $ 38 billion in the second quarter compared to Lowe’s $ 27 billion. The Home Depot does a great job of defending its position by implementing better buying options and expanding its reach, but there may not be much it can do to meet Lowe’s challenge. .
What does this mean for investors?
Lowe’s shares have outperformed Home Depot’s so far this year, with a 38% increase alongside Home Depot’s 27% increase, as of this writing. Home Depot always has everything going in its favor, and it doesn’t slow down or back down in the face of Lowe’s challenge. But Lowe’s still has more room to grow. It does everything it can to reach and surpass Home Depot as the premier home improvement chain, and it definitely has a shot at making it No. 1.
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