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. 

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STRENGTHS

  • Established presence and efficient merchandising

  • Strong logistics and distribution system Focus on offering seamless multi-channel experience 

WEAKNESSES

  • Reliance on third party manufacturers could undermine Lowe's reputation 

THREATS

  • Intense competition to strain margins

  • Increasing labor wages 

OPPORTUNITIES

  • Growing e-commerce and m-commerce sales

  • Home improvement provides an opportunity to increase sales

  • Rising immigrant population 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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