Lowe’s (LOW) Gains Strength in Professional Business and Online Sales
Companies in the home improvement products sector such as Lowe Enterprises, Inc. LOW has benefited from the consumer inclination for home improvement and maintenance. Experts believe that last year’s extended stay-at-home standards have made people aware of the importance of their shelters. Consumer spending on homes has continued, although outward moves accelerate, as the interest in keeping homes well maintained is here to stay. Supported by favorable demand trends, Lowe’s experienced strong growth in its Pro business and online platform. In addition, the Total Home strategy is gaining ground and helping to meet the needs of consumers in all categories.
Shares of this company Zacks Rank # 3 (Buy) have gained 26.5% during the year-to-date period compared to the industry’s 21.1% rise. Let’s take a closer look at the aspects that contribute to the performance of this reputable home improvement retailer.
Strong online sales are an advantage
Lowe’s online platform acted like a feather on his cap. Online sales have accelerated due to a growing consumer preference for digital shopping and the company’s effective omnichannel offerings. Notably, Lowes.com sales grew 7% in the second quarter of fiscal 2021.
Lowe’s has invested in enhancing its omnichannel retail capabilities across store operations, website and supply chain to effectively meet customer demand. In this context, the company finalized the installation of Contactless Buy Online Pickup in Store lockers in its stores. The company is also working to improve the online shopping experience for customers by improving features such as search and payment. Going forward, management believes their online business model has enormous growth potential, supported by an efficient technology team and a superior cloud platform.
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Focus on auspicious business clients
Professional customers have been a major driver of Lowe’s business growth. In fact, the continued focus on the Pro category is a very important part of the Total Home strategy. In the fiscal second quarter, the company’s Pro sales increased 21%. To continue driving sales to professional customers, the company has increased brands focused on professionals. Careful partnerships help the company provide professional customers with a wide range of assortments that meet their specific home renovation and maintenance needs. Lowe’s has revamped its pro-service professional website, LowesForPros.com. to meet the specific needs of Pro customers. Management is focused on driving greater Pro penetration through the Pro Customer Relationship Management or CRM tool.
The residential renovation market has potential
Consumers have invested in making homes well equipped for work from home and entertainment needs amid the pandemic. Lowe’s continues to serve the needs of consumers for renovations, space conversion projects, as well as basic repair and maintenance activities. Lowe’s is also gaining traction with the new Total Home strategy, which includes providing complete solutions for various types of home repair and improvement needs. The Total Home strategy is expected to increase market share by accelerating investments in pro offerings, installation services, localization as well as increasing product assortments.
In the second fiscal quarter, comparable sales in the United States increased 32% on a two-year cumulative basis. This reflects the continued success of the company’s Total Home strategy. During the second quarter, the company recorded 21% growth for Pro, 10% growth for Installation Services and strong comparable sales across all Decor product categories. It delivered strong performances in kitchen and bath, floors, appliances and decor, in addition to a 20% increase in these categories over the period last year.
Strong execution of growth strategies along with a compelling product offering from well-known brands and high-value private labels have helped Lowe’s effectively meet the high demand for home improvement products. Management believes that the home improvement market has strong growth potential as consumers are increasingly motivated to invest in homes and continue urbanization trends. Backed by such benefits, the company forecasts revenue of nearly $ 92 billion in fiscal 2021, indicating 2.7% year-over-year growth.
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