Wilkesboro, NC, Apr. 3--Lowe's Cos. hasn't seen anything in the U.S. housing market that would cause it to pull back on its plans to open 130 stores this year, according to company executives.
Speaking to analysts and investors at a Bank of America Securities conference in New York, treasurer Marshall Croom and Nick Canter, senior vice president of operations for Lowe’s northern division, said the company's market research leaves it confident regarding planned store openings.
“I think you'd have to have a very dramatic falling off the cliff in the housing market before we'd pull back in our storing strategy," they said. "Certainly we're not seeing anything to date that would cause us to pull back."
Lowe's executives also said the retailer plans to roll out a new store management structure in May. Lowe's will put five new managers in each store in order to provide more resources for general store managers and more career development opportunities for workers, Canter said. Stores will get a human resources manager and four new operations managers, including one to handle administrative issues and one to focus on in store sales specialists, who are key to selling projects, such as kitchen remodeling and special orders.
Canter indicated that the retailer's efforts to attract and retain good workers are paying off. He said the company has had 20 consecutive months of increased employee retention and decreased turnover.
"The morale in our stores is high," he said.
The company's larger rival, Home Depot, has recently been taking steps to boost employee morale that has been buffeted in the last few years by management and operational changes.
Asked to comment on what effect Home Depot's latest changes are having on Lowe's, Canter said the company is too busy opening stores, in the Northeast for example, to focus on Home Depot. The Northeast is the latest among Home Depot strongholds that Lowe's has been invading in recent years.
"We're extremely busy on our business plans, and I really can't comment on what they might be doing," he said.
The executives sought to address some analysts' concerns that Lowe's and Home Depot will be hurt in coming years as the market for big box home improvement retailers becomes saturated. Home Depot has more than 1,400 stores.
Calling saturation a fluid and complex issue, Croom said Lowe's believes that it can continue to gain share in the fragmented industry and expand consumer interest in its existing product categories rather than saturate the market.
Of 18 broad product categories at Lowe's, home centers hold the leading marketshare in only five of those, he said. Lowe's has placed particular emphasis on growing its market share in appliances, lighting and flooring, he said.
So far, the strategy seems to be working, he said. For example, in the Indianapolis market, Lowe's had six stores in 1995, and its two big box competitors had a combined six stores. Lowe's now operates 11 "very profitable stores" in the region, while competitors have 16 stores.
He also said large metropolitan markets remain a big opportunity for growth. Only 22% of the company's more than 850 stores are in the top 25 metropolitan U.S. markets.
Lowe's could add 250 stores to California alone, where it now has 42, if it sought a similar market penetration as it has in North Carolina, where it has the highest concentration of stores, Croom said.
Smaller markets also offer opportunities for profitable growth, he said. The company's smaller stores require a smaller capital investment, but their returns can match those of larger metropolitan stores, executives said.
