Home Depot vs Lowes Essay

4369 Words Feb 8th, 2011 18 Pages
Home Depot vs. Lowe’s

Financial Analysis And Comparison

AIM 6344 Group Members
Cenk Tolunay Yan Wang Hong Ma Yuhong Zhang

1) Background
1.1 The Home Depot
The Company was founded in 1978 in Atlanta, Georgia and has since become the world's largest home improvement retailer, operating more than 1,500 stores (Home Depot, EXPO, and other subsidiary companies) across North America. Home Depot caters to both do-it-yourselfers and professional customers who serve the home improvement construction and building maintenance market segments. Today, Home Depot’s stores stock up to 35,000 different kinds of building materials and lawn and garden products. Home Depot’s unique services include free in-store clinics for home improvement
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Lowe’s is targeting the customers who are interesting shopping for big-ticket appliances and high-margin home furnishings at its urban stores. Lowe's is pushing hard for growth to make up for lost time. The top home-improvement chain until the late 1980s, it was knocked off its perch as Home Depot embraced "big-box" retailing, while Lowe's clung to its small-town stores. Robert Tillman, 58, who has worked at Lowe's for 39 years, became CEO in 1996. A year later, fearful that Lowe's would forever lose out to Home Depot, Tillman began to open a handful of larger stores in metro areas. Now, Lowe's is accelerating that rollout just as Home Depot, which has saturated the largest markets, slows its expansion in order to squeeze more sales out of existing stores. To finance its expansion, Lowe's has added $2 billion in long-term debt during the past two years. In recent years, Lowe's earnings gains have outpaced its big rival's. In the first quarter of 2002, same-store sales at Home Depot rose 5%. But Lowe's, which opened 46 stores in the quarter, did even better: Its same-store sales climbed 7.5%. Lowe's profits jumped 54%, to $346 million, in the quarter. Home Depot failed to keep pace, as profits rose only 35%, to $856 million. The difference between a Lowe's store and a Home Depot has been fairly clear-cut up to now. Presentation counts at Lowe's.

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