Atlanta, GA, Nov. 24--Lowe's is winning the battle for women customers just nine miles from the Atlanta headquarters of Home Depot Inc., which pioneered the warehouse-style store.
"I love shopping at Lowe's," painter Joyceln Marks said while carrying light bulbs and plants from a Lowe's store on Peachtree Industrial Boulevard in the Chamblee section of Atlanta. "Home Depot is too cluttered and it's not as clean."
Lowe's chief executive Robert Tillman is gaining sales faster than Home Depot by focusing on women, who initiate about 80 percent of all home improvement projects, he said at a September investor meeting. Lowe's is offering a bigger selection of appliances and merchandise, such as $898 Jacuzzi whirlpool baths, while organizing stores with wide aisles, brighter lighting and larger signs to make products easy to find.
The attention to details helped boost Lowe's sales at stores open at least a year by 7.1 percent in the third quarter, compared with 4.5 percent for Home Depot, analysts surveyed by Thomson Financial estimate. They expect Lowe's to report tomorrow that profits rose to about $427 million, or 53 cents a share, from $339 million, or 43 cents, a year earlier.
A survey of women shoppers in July by Forrester Research found 69 percent rated Lowe's highest in cleanliness versus 31 percent for Home Depot, while 57 percent preferred Lowe's merchandise selection. By contrast, 54 percent rated Home Depot's stores as more convenient, while women rated both companies equally on having the best prices.
"Lowe's is targeted more toward females, and a higher-income demographic," said Neil Stern, principal with the McMillan/Doolittle retail consulting firm in Chicago. "They are selling the same stuff, but the bull's-eye of their focus is slightly different."
A stronger economy and increased consumer spending on home improvements has helped both chains.
Wilkesboro, NC based Lowe's closed Friday at $57.51 in New York Stock Exchange composite trading, while Home Depot ended the week at $35.66. Lowe's had jumped 55 percent this year and Home Depot 51 percent, both more than double the 20 percent gain for the Standard & Poor's 500.
Lowe's is adding more designer brands, including Eddie Bauer and Nickelodeon paint and Levolor faux wood blinds. The company has expanded to 250 brands of major appliances, adding energy-efficient washers such as Maytag's Neptune and Whirpool's Calypso. That's a selling point among women as Lowe's adds stores in metropolitan markets dominated by Home Depot.
"We have continued to gain [market] share in appliances," Lowe's resident Robert Niblock said in an August interview. "The most compelling thing is just the dominant offering we have. The high-efficiency laundry products are really where a lot of the innovation has taken place."
Last month, 33 percent of Lowe's stores surveyed exceeded their sales targets, compared with 27 percent of Home Depots, according to a survey of appliance sellers by Longbow Research analyst David S. MacGregor.
Lowe's has about half the sales of Home Depot, the world's second-biggest retailer after Wal-Mart Stores Inc.
Lowe's, which started in small markets such as Asheville, NC, is opening 65 percent of its 130 new stores this year in urban markets, including its first store in Chicago, where Home Depot now has 55 stores. Lowe's will open more stores than planned in markets including Dallas and Atlanta because of the higher than expected sales, Tillman said at the investor meeting in Charlotte.
Tillman, 60, who received salary and bonus of $4 million last year, is working to reduce supply costs by cutting inventories and importing lower-price goods to boost profit margins, which trail Home Depot.
Lowe's had a gross margin of 30.3 percent last year, compared with 31.1 percent for Home Depot.
