How Did Lowe’s Fiscal 2016 Sales Growth Stack Up against Rivals?



Same-store sales growth analysis

Lowe’s (LOW) same-store sales in fiscal 4Q16 grew 5.2% for the company overall and 5.5% in the US. The retailer reported positive comps in all 14 geographic regions in the US and all 13 product categories in the quarter with appliances, garden, lumber and building materials, and paint posting above-average same-store sales.

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Performance drivers

Lowe’s has also been concentrating on its appliance sales for a while. Appliance sales comps grew at a double-digit pace for four straight quarters prior to fiscal 4Q16. In 4Q16, appliance comps grew at a high-single-digit rate, according to Robert Niblock, CEO of Lowe’s. Lowe’s has been showcasing complementary appliance suites in-store and helping customers visualize their purchases online with tools like a 360-degree view.

Using its three-brand approach, paint sales were boosted by the strong response to the HGTV Home range by Sherwin-Williams (SHW) as well as Valspar’s (VAL) and Olympic’s paint offerings. Lowe’s also reported higher-than-average comps from its pro customers. The retailer has seen double-digit comps sales growth from pros that are serviced by its Account Executive Pro Services (or AEPs). Lowe’s is planning to add around 35 new representatives in fiscal 1H17 to capitalize on the opportunity[1. Based on comments by Michael A. Jones, Chief Customer Officer, Lowe’s].

Comparable performance for Lowe’s and rivals

Despite the strong showing by the retailer, Lowe’s earnings report for the fourth quarter was relatively weaker than that posted by rival Home Depot (HD), the world’s number one home improvement retailer. Fourth quarter same-store sales grew slower at 5.2% in the US for Lowe’s versus 8.9% for Home Depot. On the other hand, Home Depot stopped new store rollouts in the US, which could also provide a slight bump to its same-store sales numbers.

Restoration Hardware (RH), which also posted preliminary fourth quarter numbers on February 24, reported same-store sales growth of 9%.

LOW and HD together constitute 10.1% of the portfolio holdings in the Consumer Discretionary Select Sector SPDR Fund (XLY).


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