Home Depot Or Lowe’s — Which Retailer Is Doing Better In 2016?
Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) are the number one and two home improvement retailers in the U.S., holding 24% and 17% market shares, respectively. Both the retailers have begun 2016 on a bright note, even though most of the other retailers have suffered due to lower than expected customer spending. Home improvement retailers have beaten this trend. But which company did better than the other?
Facing up to Home Depot, which has more stores in the U.S. (1,977 stores compared to Lowe’s 1,805 stores), and is typically more well-known, Lowe’s is focusing on making itself more customer-centric for the non-expert — a potentially weak spot for Home Depot. [1] This could help Lowe’s gain more Do-It-Yourself customers and help it differentiate itself from Home Depot. This strategy can be seen playing out in the Q1 results where Lowe’s comps beat that of Home Depot’s, on the back of higher customer transactions.
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However, Home Depot still scored better in terms of overall sales growth, and is operating on a higher margin as compared to Lowe’s. Moreover, Lowe’s gross margin declined by 50 basis points in Q1, as sales of lower margin products grew by a high proportion. Lowe’s plans to open 45 home improvement and hardware stores this year, including stores in the U.S. and international markets. Increasing presence could help Lowe’s further narrow its gap with Home Depot.
Have more questions on Lowe’s? See the links below.
- Lowe’s Riding On Strong Customer Spending On Home Improvement; Beats Home Depot’s Comps In Q1
- Where Will Lowe’s’ Revenue And EBITDA Growth Come From Over The Next Three Years?
- How Has Lowe’s’ Revenue And EBITDA Composition Changed Over 2012-2016E?
- By What Percentage Have Lowe’s’ Revenues And EBITDA Grown Over The Last Five Years?
- What’s Lowe’s’ Fundamental Value Based On Expected 2016 Results?
- What Is Lowe’s’ Revenue And EBITDA Breakdown?
Notes:
- Gap narrows between Lowe’s and Home Depot, cnbc.com [↩]