Lowe’s to enter Australia

Lowe’s, the second largest home improvement retailer in the United States, has entered into a joint venture with Woolworths, Australia’s largest retailer. Under the agreement, Lowe’s and Woolworths will build a chain of home improvement stores throughout Australia. Lowe’s will become a one-third owner of the operation, which expects to open its first store in the 2011 fiscal year.

Woolworths, which sells consumer electronics, general merchandise, groceries, gas and liquor, is Australia’s largest private sector employer, with more than 3,000 retail outlets and US$37 billion in annual revenues. The company has already secured government entitlements for 12 locations for the home improvement stores and is in negotiations for another 15 new development sites.

The joint venture partners hope to build 150 stores over the next five years. The units will be large-format stores, greater than 100,000 sq. ft. and will target the pro customer as well as the homeowner, according to the announcement.

“This is a tremendous opportunity to enter the A$24 billion (US$20 billion) and growing home improvement market in Australia, at a time when the sector is underserved,” said Lowe’s chairman and CEO Robert Niblock. The joint venture’s closest competitor would be Bunnings, a chain of large-format stores with 175 locations in Australia.

As part of the joint venture agreement, Lowe’s would help finance Woolworths' takeover bid for Danks Holdings, a large hardware distributor that supplies many of Australia’s independent hardware stores. Danks is owned by Wesfarmers, the parent company of Bunnings.