Lowe’s kicked off its annual meeting of shareholders in Charlotte, N.C., with discussion of a difficult housing market and the ways the nation’s second largest home channel retailer is working to control costs.
President and chief operating officer Larry Stone also discussed initiatives meant to control costs in the coming year. While Lowe’s still plans to open 120 stores this year, the company has opted to postpone the opening of 20 locations. Lowe’s will pull back on major remerchandising plans for certain stores in 2008, but “routine maintenance will continue at the same pace,” Stone said. The retailer also has halted plans to open a 14th regional distribution center.
Lowe’s CEO Robert Niblock said that 2007 was a much rougher year than had been anticipated, not only because of the continued weakness in the housing market and its obvious connection to the retailer’s sales, but because of the additional credit crunch that further dampened consumer interest.
“In addition, in 2007, consumers also were pressured with increasing fuel costs, rising food prices and a tightening job market,” Niblock said.
Stone went on to promote the company’s customer service image, which is “more important than ever” in an increasingly competitive retail landscape. Stone also said that Lowe’s has in the past strategically planned to capture market share during “prior downturns,” and “we’re focused on doing it again.”
Only two shareholders posed questions to executives and the company’s board of directors. A representative of People for the Ethical Treatment of Animals (PETA) criticized the sale of certain glue rodent traps at Lowe’s stores. PETA also criticized the sale of the traps at Home Depot’s annual meeting, held last week. Both companies said there is a consumer desire for the products.
James Harris of Raleigh, N.C., asked whether the impending sale of GE’s appliances division would have any “material effect” on Lowe’s, which stocks a wide range of GE appliances.
“GE is a great vendor for Lowe’s. We fully anticipate if the business is either spun off or sold to a third party, we will still have the GE products available in our stores,” Niblock told shareholders.
Lowe’s saw its first-quarter profit fall 18 percent, while comparable-store sales were down 8.4 percent. The retailer predicted that comp-store sales would drop “at least” 6 percent in the second quarter and in the full year.