Renovating Lowe’s From the Inside Out

By CultureBanx Team

  • Lowe’s reported only 1.5% same-store sales growth in Q3

  • Marvin Ellison is trying to make Lowe's more competitive

Home improvement store Lowe’s (LOW -0.63%) continues to be riddled with problems as newly minted CEO Marvin Ellison discovered in its most recent business review. Does Ellison have a clear strategy for correcting the company’s issues?

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Why This Matters: Just like his last role at the helm of JCPenney’s (JCP -0.76%) Ellison is once again being tasked with creating another turnaround plan for a struggling retailer. Lowe’s reported only 1.5% same-store sales growth, well below analysts estimates for a 2.8% increase. Shares of Lowe’s are down more than 5% year to date.

“[O]ur inefficient reset process continued to create disruption in our stores and contributed to out-of-stocks. In fact, all of our categories with negative comps, millwork, paint, fashion fixtures and flooring, were pressured by poorly-executed resets” said Ellison on the company’s Q3 earnings call.

Every analyst on the street hasn’t counted Lowe’s out just yet

Every analyst on the street hasn’t counted Lowe’s out just yet. “While disappointing Q3 results reinforce the view that considerable issues remain, we are still encouraged that the new leadership is setting the stage for a multi-year turnaround,” wrote Wells Fargo analysts led by Zachary Fadem.

Situational Awareness: Ellison seems more than willing to make some big changes to help Lowe's become more competitive, especially against its arch nemesis Home Depot (HD -0.27%). Typically Home Depot has higher sales per square foot than Lowe’s, something Ellison plans to combat by not just randomly hiring more people. The company has already announced its closing dozens of underperforming stores including the 99 Orchard Supply Hardware stores they own in California, Oregon and Florida by the end of the fiscal year.

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