Home Depot and Lowes Essay Example for Free

Home Depot and Lowes EssayCase SummaryValue Line Publishing analyst, Carrie Galeotafiore had followed the retail building-supply industry for approximately three years. in spite of appearance a week the investment-survey firm will be publishing Galeotafiores quarterly findings on the industry along with the five-year financial forecast for the industrys leaders, Home Depot and Lowes.In an effort to increase their top and bottom-lines, Home Depot and Lowes have implemented strategies like improving customer service, attracting headmaster customers, and introducing a more favorable merchandise mix. Combined sales from the two companies accounted for more than a third of the industrys sales. In the mean time, small hardware stores struggled to remain in the game. Galeotafiore reports shows confidence in the methods Home Depot deployed to achieve their goals and attributed Lowes margin expansion to their thrust into the major metropolitan markets.This character will mainly focus on the strategic issues involved with Home Depot and Lowes, the industry trends, the financial outlook for the respective companies, and whether or not Galeotafiore has the knowledge of knowledge and experience to make a correct call on the companies performance.Finally, the report will be substantiated with financial ratios comparing champion company with the other, cover possible alternatives and proposing recommendations.Case AnalysisThis segment will narrow down the major issues of the case, along with the quantitative perspective showing historical trends and the projected direct of economic activity. In 2001, the Economist Intelligenc Unit (EIU) estimated the retail building-supply industry to be approximately $175 billion with stores similar to Home Depot and Lowes capturing one third of the 51% of sales in their category. Despite the slump in the economy in 2001, growth was at 4.2% which representd a decline from 7.7% in 1998. strategical issues for Home Depot and Lowe sHome Depots CEO, Bob Nardellis goal was to increase their margin through declining cost in merchandise review, opening more tool-rental centers and improving purchasing aspects. All of the above were an effort to remaincompetitive. Galeotafiore stated in her report that stores which provide programs similar to the Service motion Improvement offered by Home Depot tend to fear better in operating 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, based on an opinion that their stock price was richly valued compared to Home Depots. However, on the brighter side, Lowes management told analysts that over the bordering two years, it expected to maintain 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 populations ove r 500,000 like the Boston and New York markets.