Home Depot and Lowes Essay

Case SummaryValue Line issue analyst, Carrie Galeotafiore had followed the retail building-supply industry for approximately three years. Within a calendar week the investment-survey firm will be publishing Galeotafiores quarterly findings on the industry along with the five-year pecuniary forecast for the industrys leaders, denture depot and Lowes.In an effort to increase their top and bottom-lines, rest home Depot and Lowes have implemented strategies like improving customer service, attracting paid customers, and introducing a more favorable merchandise mix. Combined sales from the 2 companies accounted for more than a terce of the industrys sales. In the signify time, smaller hardware stores struggled to remain in the game. Galeotafiore reports shows confidence in the methods Home Depot deployed to achieve their goals and attributed Lowes margin expansion to their thrust into the study metropolitan markets.This case will mainly focus on the strategic issues involved wi th Home Depot and Lowes, the industry trends, the financial outlook for the individual companies, and whether or not Galeotafiore has the depth of knowledge and experience to make a correct call on the companies performance.Finally, the report will be substantiated with financial ratios comparing one company with the other, showing possible alternatives and proposing recommendations.Case abbreviationThis segment will narrow down the major issues of the case, along with the numeric perspective showing historical trends and the projected level of economic activity. In 2001, the Economist Intelligenc Unit (EIU) estimated the retail building-supply industry to be approximately $ one hundred seventy-five billion with stores akin to Home Depot and Lowes capturing one third of the 51% of sales in their category. Despite the slump in the parsimony in 2001, growth was at 4.2% which representd a decline from 7.7% in 1998. strategical issues for Home Depot and LowesHome Depots CEO, chas e Nardellis goal was to increase their margin through declining cost in product review, opening more tool-rental centers and improving purchasing aspects. All of the supra were an effort to remain competitive. Galeotafiore stated in her report that stores which provide programs similar to the Service Performance Improvement offered by Home Depot scat to fear better in operating margins, inventory turnover and productivity, than the homemade establishments. Jefferies analyst Donald Trott downgraded Lowes, due to a declining housing-market bubble and, based on an persuasion that their stock price was richly valued compared to Home Depots. However, on the brighter side, Lowes management told analysts that over the bordering two years, it expected to obligate sales growth between 18% and 19% and over the next three years from 2002 to 2004 it is expected to open 123, 130 and 140 stores respectively entering metropolitan markets with populations over 500,000 like the Boston and N ew York markets.