Toronto, Ontario, June 3--Lowe's Cos. Inc. could be looking to hammer its way into Canada's competitive home improvement market, but retail experts warn it may not be easy for the U.S. powerhouse to nail down prime real estate and build sales, according to Canadian Press.
A Lowe's spokeswoman hinted Thursday the company might be mulling a move into Canada, saying it is certainly scouting international growth opportunities.
Lowe's chairman and CEO, Robert Niblock, has previously expressed interest in international growth.
"We have not made any announcements or confirmed or denied any rumors that may be floating around," said Chris Ahearn, a spokeswoman for Lowe's in Mooresville, N.C.
"We have been evaluating opportunities around the globe, but we have not been any more specific than that."
Ahearn declined comment on speculation that Lowe's has commenced talks with Rona Inc. (TSX:RON) of Boucherville, Que., to pursue a possible merger or takeover.
Rona has become a powerful contender in Canada to top-ranked home improvement chain Home Depot.
"We don't react on any move by potential or actual competitors. They do what they want," said Rona spokesman Sylvain Morissette.
"The fact is that Rona is a consolidator in the market. We are a company that acquired many companies (Lansing, Revy, Revelstoke) during the latest years. We are continuing to develop the company by acquisitions, by constructing our stores and by doing recruitment."
Media reports have named real estate experts Michael Goulais and Alan MacKenzie of M. Goulais Consultants as Lowe's representatives in Canada, but neither would provide confirmation.
But the conjecture appeared to drive down Rona's shares by $1.12, more than four per cent, to $25.75 on the Toronto Stock Exchange, off its session low of $25.36.
Much like Rona - and to a lesser extent, Home Depot - Lowe's actively caters to women's tastes with wide aisles, bright lights and a merchandise mix that includes "softer" home decor products.
Retail consultant John Williams of J.C. Williams Group Ltd. said while increased competition from Lowe's would be good for Canadian consumers, unhinging sales here from Home Depot would be no easy task.
Also, Williams said Lowe's would have to effectively dominate the Greater Toronto Area, Calgary, Edmonton and the Quebec market - at the very least equalling the real-estate presence of their rivals.
And while Home Depot and Rona capture about 10 to 15 per cent of the Canadian market respectively, another popular homegrown rival could easily throw a wrench into a possible Lowe's expansion.
"Don't forget we've got Canadian Tire in this game too, and Wal-Mart is on the fringes," Williams said, noting the popularity of the Canadian Tire money discount program.
"Every Canadian is within 15 minutes of a Canadian Tire. They don't sell lumber, but they certainly sell tools, hammers and all that (home decor)."
Lowe's would also have to overcome history. In 2000, Reno-Depot, then-owned by France's Castorama S.A. group, tried to penetrate the lucrative Ontario market with the opening of its new banner, The Building Box. Three years later, it was snapped up by Rona, which currently has 566 stores across the country.
Lowe's has more than 1,100 stores in the United States but is still dwarfed by Home Depot Inc., the world's biggest home improvement retailer, which has almost 2,000 stores in Canada, the United States and Mexico. There are currently 120 Canadian locations, with another 18 scheduled to open this year.
"We can't comment because it is speculation," said Home Depot spokesman Nick Cowling. "What I can tell you is that we're very, very proud of our performance here in Canada. We are the country's largest home-improvement retailer."
