COMPANY DESCRIPTION

Lowe's Companies and subsidiaries is a home improvement retailer. As of Jan 31 2014, Co. operated 1,832 home improvement and hardware stores in the U.S., Canada and Mexico. As of the same date, Co. also operated 72 Orchard Supply Hardware stores in the U.S. Co.'s home improvement products include: kitchens and appliances; lumber and building materials; tools and hardware; fashion fixtures; lawn and garden; seasonal living; paint; home fashions, storage and cleaning; flooring; millwork; and outdoor power equipment. Co.'s services includes installation services through independent contractors, extended protection plans, ProServices, credit financing and its MyLowes online tool. 

 

ECONOMIC MOAT

Lowe’s moat comes from being  the second largest global home improvement retailer.  LOW size and scale allow it to Lowe’s capture a low cost position. Lowe's information technology platform and supply chain are also competitive advantages.  Like Home Depot – Lowes is authentic and trusted by customers.  This is hard to duplicate.  Tractor Supply is closing the gap in certain categories.

 

OUTLOOK

Lowes is performing well. Fiscal 2015 is shaping up to be better than we previously expected. The housing and remodeling markets, which are likely to be buoyed by lower energy prices, favorable home affordability levels, and growth in jobs, incomes, and the use of credit, should continue to provide a tailwind for Lowe's. Internally,efforts to court professional customers and build a stronger online and omnichannel retail presence are promising. A supportive macroeconomic backdrop (employment gains, GDP growth, interest rates that remain historically low, etc.) should combine with management's efforts to cut costs, improve customer service, and offer more compelling merchandise to drive earnings growth and support the stock.