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Changes vs. distractions: Lowe’s walks a fine line

BY Ken Clark

Lowe’s has big plans. That’s another way of saying it has a lot on its plate. 

During a third-quarter earnings call in which Lowe’s CEO Robert Niblock described the company’s performance as below its expectations, he was asked about distractions and changes and their impact on results. 

The CEO went on to explain that it’s better to consolidate changes and get through them quickly than to wait for things to get better. 

"I think when you think at the significant amount of change that we put the organization through, in time … there’s got to be some amount of disruption associated with that."

The changes support the idea of meeting the customers’ needs regardless of when, where or how they want to shop, he explained.

The changes taking place at Lowe’s include the closing of 27 stores this year; the launching of the My Lowe’s Web tool in October; the launch of Never Stop Improving brand positioning in September; streamlining the field organizational structure, resulting in fewer districts and regions; and zeroing in on an everyday low price approach. 

He added: "We think that we’ve now gotten most of that behind us."

The company posted a sales increase of 2.3% for the third quarter, as net earnings declined 44.3% to $225 million.

Speaking to investors in his prepared remarks, Niblock said: "As I said before, our performance is not at the level we expect relative to the market or frankly, that we demand of ourselves as we define success, so we’re taking action. The executive team is looking at our business from a fresh perspective, and we’re evaluating how we operate on a cross-functional basis to ensure consistent and connected execution."

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New at Newell Rubbermaid: Corporate realignment

BY HBSDEALER Staff

Newell Rubbermaid is consolidating its current three operating groups into two — Newell Consumer and Newell Professional.

The move, part of its previous realignment of its global business units as part of its Project Renewal initiative, will also see 13 global business units roll into nine. These changes take effect Jan. 1, 2012.

"The creation of two operating groups and nine global business units will simplify our organization and free up resources to be invested back into key growth initiatives and strengthened capabilities," said Newell Rubbermaid president and CEO Michael Polk. "These changes are key enablers to building a bigger, faster growing, more global, more profitable Newell Rubbermaid."

Newell Professional will comprise four global business units: Commercial Products, Construction Tools & Accessories, Labeling Technology & Integrated Solutions, and Industrial Products & Services. These four professional-facing global business units will report to William A. Burke III, group president, Newell Professional.

Newell Consumer will also comprise four global business units: Home Organization & Style, Writing & Creative Expression, Fine Writing, and Culinary Lifestyles. These four consumer-facing global business units will report to Penny McIntyre, croup president, Newell Consumer.

As previously announced, the Baby & Parenting Essentials global business unit will report directly to CEO Polk.

The Construction Tools & Accessories GBU will comprise the current Construction Tools & Accessories GBU and the former Hardware GBU. Key brands in this new GBU are Irwin, Shur-Line, Bulldog and Ashland.

The Home Organization & Style GBU will comprise the Rubbermaid Consumer GBU, Décor GBU and the Beauty & Style GBU. Key brands in this new GBU are Rubbermaid, Levolor and Goody.

The Labeling Technology & Integrated Solutions GBU is simply a name change from the Office Technology GBU and a realignment of this GBU to the Newell Professional operating group. The Writing & Creative Expression GBU will comprise the current Everyday Writing GBU and the Markers, Highlighters, Art & Office Organization GBU. 

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HD’s Menear points to merchandise highlights

BY HBSDEALER Staff

Atlanta-based Home Depot’s wind-and-storm aided sales effort in the third quarter presented several category highlights, according to executive VP merchandising Craig Menear.

The company’s strong third-quarter performance, which included a 13% net earnings increase and comp-store sales of positive 4.2%, included strength "in the core of the store" and growth in average ticket and transactions.

"The maintenance and repair categories that make up the core of our store continue to perform well," Menear said, during the company’s third-quarter earnings call. "Project basics such as pipes and fittings, fasteners, air circulation, hand tools, chemicals, caulks and appliance parts were positive. And, as customers prepared for winter, small maintenance projects like insulation and waterproofing also sold well."

In addition to storm-related sales strength, the company saw higher-than-company-average comps in tools, electrical, indoor garden, building materials, plumbing and hardware. 

Ten departments in all posted positive comps, with paint, flooring, lighting and kitchens rounding out the list. 

Negative comps for the third quarter occurred in the following categories: lumber, outdoor garden, bath and millwork. 

Brands and product innovation played a role in sales growth, he said. " We offered outstanding values in power tools from brands like Ryobi, Milwaukee, Makita, Ridgid and DeWalt, and we are seeing consistent response to these brands from our customers," he said.  Pro customers are responding well to exclusive-to-Home Depot hand tools from Milwaukee and DeWalt, he added

LED lighting continues to advance on the shelves, with the first commercially available 75-watt equivalent LED A-Line replacement, he said.

The Home Depot’s chief merchant also shared the following third-quarter trends with investors:

• Total transactions grew by 1.2%;

• Average ticket increased 3.0%;

• Transactions for tickets under $50 — about 20% of the company’s U.S. sales — were flat in the quarter; and

• Transactions for tickets more than $900 — also representing some 20% of U.S. sales — were up 3.6% in the quarter.

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