Pro growth, expanding brands just two takeaways from Lowe’s recent leaders’ conversation.
Growth in pro business at Lowe’s is one of the key takeaways from the company’s recent fireside conversation.
Lowe’s Companies, Inc., held a virtual fireside chat recently. Company participants included: Marvin Ellison, chairman and CEO; Brandon Sink, EVP and CFO; and Kate Pearlman, VP of investor relations.
Here are five takeaways from the Lowe’s executive team discussion, all in their own words:
“Our pro customers are as healthy as they’ve ever been; busier than ever,” said Brandon Sink, EVP and CFO at Lowe’s. “When we look at the pro, we view the health of the pro business across several dimensions, their backlog, confidence in their job prospects as well as their access to materials, labor and credit. And those indicators, again, as we look across the board, are all very strong.”
Marvin Ellison, chairman and CEO of Lowe’s said, “This gives us the ability to stock the key pro-related SKUs in deeper inventory quantities, and we’re expanding our ability to deliver next day large orders.”
Expanding brand portfolio
“Let’s talk about the national brands for a second, specifically to the pro customer. We brought back brands that we had lost under the prior leadership team. These brands are critical for pros. And some of those brands are Bosch, the expansion of DeWalt, which is still the number one pro power tool brand, Eden, SharkBite, Spyder and Simpson Strong-Tie, just to name a few,” said Ellison.
“And while we’re still going after a few additional brands, we are confident that the brands listed are sufficient for us to win with today. And we’re also pleased when you think about the exclusive brands we’ve gone out to get like Ego and Skil,” said Lowe’s CEO.
“We are the home improvement retail channel for those brands, and these are the number one brands in battery outdoor power equipment, and we delivered record sales for Ego and Skil. It’s been a win-win. And we’re also continuing to expand our private brands as a way to create differentiation for our DIY customer,” said Ellison.
“Rising rates will impact home turnover because those existing homeowners are going to pause and maybe try to wait it out before departing from a low fixed mortgage rate,” said Ellison.
“But when those customers decide to stay in those existing homes because of higher rates, then they’re going to make modifications in that existing home that really benefits our business,” he said.
“They’re going to decide that rather than getting a new home maybe they put in that new kitchen. Maybe modernize the bathroom. Maybe finish that basement. And so those are the kinds of projects that play in our favor. But historically, rising rates alone do not have a negative impact on the home improvement sector,” said Ellison.
Home improvement is “a big marketplace” but very fragmented, Lowe’s leaders indicated.
“I think we all would agree that even as we’re in this post-COVID world, the customers are going to just look at their homes differently because you just can’t rely on your home as a residence, but it’s a place of remote work and remote learning,” said Ellison.
“A Total Home strategy is going to further allow us to grow market share gains in this post-COVID environment as we grow across the do-it-yourself customer and the pro customer,” said Ellison.
Supply chain recovering
“We’re seeing some ports around the globe continue to recover, but certainly not yet back to the 2019 levels when container ships were flowing without disruption,” said Sink.
“And then more recently, the ongoing Russia-Ukraine conflict, zero-COVID policy in China have added to the uncertainty around when we’re going to see recovery more globally,” he said.
“As early as last fall we began to actively leverage the scale that we had, our relationships with our transportation partners and our shipping carriers to secure capacity, mitigate the impacts of the price increases that we were seeing,” said Sink.
“This is a big marketplace. When you think about the entire home improvement available market, I mean, it’s roughly $900 billion. So, it’s obviously very fragmented. You take us and our largest chief competitor, and we’re going to make up less than $400 billion of that $900 billion addressable market,” said Ellison.
“So, there’s a lot out there. Having said that, without question, we think the efficiency of our supply chain, and the execution, and the inventory management of this team gives us the ability to take some share away from smaller regional players,” said Ellison.