Lowe’s performance: a primer
There’s a lot going on at Lowe’s. The changing of the guard in the corner office – from Robert Niblock to Marvin Ellison -- is just the beginning.
There’s also the recently announced a $1 billion investment in Lowe’s from activist investor William Ackman. There’s the 10%-plus jump in the company’s share price, and the slightly disappointing first quarter results. All that happened last week.
In the meantime, there’s a big business to run. Here’s s a company primer based on its first quarter earnings call with investors:
What does Robert Niblock say about incoming Lowe’s CEO Marvin Ellison?
Niblock kicked off the company earnings call with a welcoming message to Ellison: “Marvin is an experienced retail CEO and a 30-year industry veteran with expertise in complex omnichannel environments. He has a deep appreciation for Lowe’s culture, people and customers, which makes him the ideal person to serve as this great company’s next leader and I am confident that this will be a smooth transition.”
• Comps came in at 0.5% in the first quarter. Why so low?
Robert Niblock
One of Lowe’s strengths is its seasonal business. In fact, history shows that 35% of first quarter sales and 40% of second quarter are “driven by outdoor categories.” Insert into this background the coldest April since 2007 and more rain and snow in the three-month period in 12 years, and there’s an impact.
According to Michael McDermott, the unfavorable weather added up to 300 basis points of pressure on comp sales. Sales lost in the first quarter are not completely lost. They are expected “flow through” to the second and third.
• What was the leading category?
Appliances. Appliance comps were up more than 10% in the quarter.
• How did Lowes.com perform?
Sales at Lowes.com represent 5% of overall sales. Online comp growth gained 20% for the quarter.
“We continue to build out our capabilities to support the overall omni-channel experience,” said CFO Michael McDermott. “And remember, Lowes.com is not just about the business we do online but integrating those interactions for our customers throughout their home improvement journey.
• What’s happening with Lowe’s and pros?
Sales to pros outpaced sales to homeowners, and the company pointed to “solid” comps in pro-focused categories rough plumbing and electrical. Above average comps were scored in lumber and building materials, tools and hardware, and millwork.
The company says it is leveraging its maintenance supply headquarters business, investing in outside sales, and bolstering job site delivery options.
• What about paint?
Lowe’s made headlines with its story about its expanded relationship and big box exclusive with Sherwin-Williams’ brands Minwax, Cabot, Thompson’s Water Seal and Krylon.
In the store, the company said it cross trained 17,000 associates to help mixing and selling paint during peak periods. The retailer is also improving its pick-up in store program, with better signage and reserved parking to help customers pick up within two hours of their order from home.
• What about Craftsman?
In stores now are Craftsman mechanics tool sets, tools storage, garage organization, flashlight and pressure washers. Later will come individual mechanics and hand tools, power tools and some outdoor power equipment. The brand will be an exclusive to Lowe’s in the home center channel. But consumers will also find the brand in the “convenience hardware” channel at Ace Hardware stores.
There’s also the recently announced a $1 billion investment in Lowe’s from activist investor William Ackman. There’s the 10%-plus jump in the company’s share price, and the slightly disappointing first quarter results. All that happened last week.
In the meantime, there’s a big business to run. Here’s s a company primer based on its first quarter earnings call with investors:
What does Robert Niblock say about incoming Lowe’s CEO Marvin Ellison?
Niblock kicked off the company earnings call with a welcoming message to Ellison: “Marvin is an experienced retail CEO and a 30-year industry veteran with expertise in complex omnichannel environments. He has a deep appreciation for Lowe’s culture, people and customers, which makes him the ideal person to serve as this great company’s next leader and I am confident that this will be a smooth transition.”
• Comps came in at 0.5% in the first quarter. Why so low?
Robert NiblockOne of Lowe’s strengths is its seasonal business. In fact, history shows that 35% of first quarter sales and 40% of second quarter are “driven by outdoor categories.” Insert into this background the coldest April since 2007 and more rain and snow in the three-month period in 12 years, and there’s an impact.
According to Michael McDermott, the unfavorable weather added up to 300 basis points of pressure on comp sales. Sales lost in the first quarter are not completely lost. They are expected “flow through” to the second and third.
• What was the leading category?
Appliances. Appliance comps were up more than 10% in the quarter.
• How did Lowes.com perform?
Sales at Lowes.com represent 5% of overall sales. Online comp growth gained 20% for the quarter.
“We continue to build out our capabilities to support the overall omni-channel experience,” said CFO Michael McDermott. “And remember, Lowes.com is not just about the business we do online but integrating those interactions for our customers throughout their home improvement journey.
• What’s happening with Lowe’s and pros?
Sales to pros outpaced sales to homeowners, and the company pointed to “solid” comps in pro-focused categories rough plumbing and electrical. Above average comps were scored in lumber and building materials, tools and hardware, and millwork.
The company says it is leveraging its maintenance supply headquarters business, investing in outside sales, and bolstering job site delivery options.
• What about paint?
Lowe’s made headlines with its story about its expanded relationship and big box exclusive with Sherwin-Williams’ brands Minwax, Cabot, Thompson’s Water Seal and Krylon.
In the store, the company said it cross trained 17,000 associates to help mixing and selling paint during peak periods. The retailer is also improving its pick-up in store program, with better signage and reserved parking to help customers pick up within two hours of their order from home.
• What about Craftsman?
In stores now are Craftsman mechanics tool sets, tools storage, garage organization, flashlight and pressure washers. Later will come individual mechanics and hand tools, power tools and some outdoor power equipment. The brand will be an exclusive to Lowe’s in the home center channel. But consumers will also find the brand in the “convenience hardware” channel at Ace Hardware stores.