Home Depot and Lowes Essay

Case SummaryValue berth Publishing psychoanalyst, Carrie Galeotafiore had followed the sell building-supply assiduity for round triple years. Within a calendar week the investment-survey firm will be print Galeotafiores quarterly findings on the patience along with the five-year pecuniary forecast for the industrys leaders, central office computer memory and Lowes.In an effort to increase their top and bottom-lines, Home warehousing and Lowes have enforced strategies like improving customer service, attracting lord customers, and introducing a more favorable intersection mix. Combined sales from the two companies accounted for more than a third of the industrys sales. In the mean time, smaller ironware stores struggled to watch in the game. Galeotafiore reports shows confidence in the methods Home Depot deployed to achieve their goals and attributed Lowes brim expansion to their thrust into the major(ip) metropolitan markets.This case will in the main focus on the strategic issues touch on with Home Depot and Lowes, the industry trends, the financial outlook for the respective companies, and whether or non Galeotafiore has the depth of knowledge and experience to stumble a correct call on the companies performance.Finally, the report will be substantiated with financial ratios comparing one company with the other, wake possible alternatives and proposing recommendations.Case AnalysisThis divide will narrow down the major issues of the case, along with the quantitative perspective exhibit historical trends and the projected level of sparing activity. In 2001, the Economist Intelligenc Unit (EIU) estimated the retail building-supply industry to be approximately $clxxv billion with stores similar to Home Depot and Lowes capturing one third of the 51% of sales in their category. Despite the decrease in the economy in 2001, gain was at 4.2% which representd a decline from 7.7% in 1998. Strategic issues for Home Depot and LowesHome Depots CEO, wharf Nardellis goal was to increase their margin through declining cost in crossroad review, opening more tool-rental centers and improving buy aspects. All of the above were an effort to remaincompetitive. Galeotafiore stated in her report that stores which picture programs similar to the Service Performance everywhereture offered by Home Depot incline to fear better in in operation(p) margins, inventory turnover and productivity, than the do-it-yourself establishments. Jefferies analyst Donald Trott downgraded Lowes, due to a declining housing-market bubble and, found on an opinion that their stock monetary value was richly valued compared to Home Depots. However, on the brighter side, Lowes management told analysts that over the next two years, it expected to aver sales growth between 18% and 19% and over the next three years from 2002 to 2004 it is expected to open 123, one hundred thirty and 140 stores respectively entering metropolitan markets with population s over 500,000 like the Boston and raw(a) York markets.