Closest Lowe's Home Improvement Store To Me – Home Depot, Inc. (NYSE:HD) v. Lowe’s Companies, Inc. (NYSE:LO), we compare the two largest home improvement retailers with a combined share of 48% in 2021. First, we compared the company in terms of market leadership where we looked at both companies’ market share in the home improvement retail market, revenue flow by geographic region and sales metrics including sales per store and retail square foot, customer transactions and average ticket size. Noticed.
Next, we compared both the companies in terms of their service capabilities, where we checked their customer reviews on third party review sites, product range based on their websites, average price of products, and delivery and logistics capabilities.
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Finally, we analyzed the financial position of the company by looking at their profit margin in terms of gross, operating and net as well as its cash flows by FCF margin and its net debt as % of market capitalization and credit ratio. examined the profitability of
Home Depot Vs. Lowe’s: The Clear Winner (nyse:hd)
To compare both the companies in terms of their market leadership, we looked at 3 factors which were their market share, geographic revenue, store count and sales metrics.
In terms of home improvement retail market share, Home Depot and Lowe’s are the two largest companies. However, Home Depot is larger than Lowe’s and has maintained its position as the number one company for the past 10 years. Although both companies have gained share over the past 10 years, Home Depot outperformed Lowe’s with greater share gains as its revenue growth was 8.4% compared to Lowe’s 7.19%.
Furthermore, based on their annual reports, both companies show high revenue concentration in the US, accounting for more than 90% of their revenue in 2021, with Lowe’s having a slightly higher revenue contribution from the US. On the other hand, Home Depot’s revenue contribution from its international operations in Canada was slightly higher. Overall, we believe both companies exhibit high revenue concentration risk because of their lack of geographic diversification in their revenues, which are heavily dependent on the U.S., but Home Depot has slightly lower risk than Lowe’s.
While we believe the number of stores is a key indicator of its ability to serve customers, we also consider other metrics that reflect the strength of its business, including sales per store, sales per square foot, customer transactions and average ticket size. can give hints.
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Sales Metrics Home Depot Lowe’s Revenue 151, 157 96, 250 Growth % (10-Y) 8.4% 7.2% Sales Per Store 65.2 48.8 Growth % (10-Y) 8.1% 6.0% Customer Transactions (‘MLN’) 1, 760 1 , 002 Growth % (10-year) 3.0% 2.3% Average Ticket 85.9 96.1 Growth % (10-year) 5.3% 4.8% Click to enlarge
Based on the table, Home Depot had higher revenue than Lowe’s and an even higher 10-year growth rate. In addition, with greater sales per store, sales per retail square foot, and customer transactions, Home Depot was superior to Lowe’s in all sales metrics except average ticket size. In addition, Home Depot also had a higher 10-year average growth rate for all of these metrics. Therefore, we believe that although Home Depot had lower store count growth than Lowe’s, it focused on increasing sales and transactions in its stores, which was driving its revenue growth.
To forecast both companies’ revenue, we used their average 10-year sales per store decrease plus store growth of 1% per year to obtain their total revenue growth.
Revenue Projections 2019 2020 2021 2022f 2023f 2024f 2025f 2026f Home Depot Stores 1, 984 2, 296 2, 317 2, 329 2, 341 2, 352 2, 364 2, 376 Increase % -13.2% 15. 7% 0.9% 0.5% 0.5% 0.5% 0.5% 0.5% Home Depot sales per store 55.6 57.5 65.2 69.9 74.1 77.9 81.1 83.6 increase % 17.4% 3.6% 13.4% 7.1% 6.1% 5.1% 4.1% 3.1 % Home Depot Revenue ($ Million) 110, 2 25 132, 110 151, 157 162, 705 173, 500 183, 268 191, 744 198, 684 Increase % 1.9% 19.9% 14.4% 7.6% 6.6% 5.6% 4.6% 3.6% Lowe’s Stores s 1 , 977 1, 974 1, 971 1, 998 2, 025 2, 052 2, 080 2, 108 Increase % -1.9% -0.2% -0.2% 1.3% 1.3% 1.3% 1.3% 1.3% Lowe’s Sales Per Store 36.5 45.4 48.8 51.3 53.3 54.9 55.9 56.5 Increase % 3.1% 24.4 % 7.6% 5.0% 4.0% 3.0% 2.0% 1.0% Lowe’s Revenue ($ million) 72, 148 89, 597 96, 250 102, 385 107 , 874 112, 564 116,317 119,016 Increase % 1.2% 24. 2% 7.4 % 6.4% 5.4% 4.3% 3.3% 2.3% Click to enlarge
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Overall, we believe Home Depot has an edge over Lowe’s for market leadership position because of its greater market share in the home improvement retail market, slightly greater revenue exposure to international business and revenue growth, Has better sales metrics in terms of store count. Sales per average retail square foot, customer transactions and average ticket growth.
Market Leadership Advantage Market Share Home Depot Geographical Revenue Home Depot Sales Metrics Home Depot Overall Home Depot Click to Enlarge
To compare both the companies in terms of their service capability, we looked at 3 factors which were their customer reviews, product range, pricing, and delivery and logistics.
To compare the two companies in terms of customer service, we looked at their average customer reviews from Trust Pilot and identified the company with the best ratings.
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From the table, both the companies got poor reviews on Trust Pilot and both got 2 out of 5 stars. Based on reviews, we found that customer complaints were related to a variety of factors including customer service. However, Lowe’s had a slightly better rating than Home Depot. We believe this indicates a similar customer service level for both companies, but Lowe’s fares slightly better.
In addition, we examined the companies in terms of product range to determine which company has the advantage in product diversity. To compare their product range, we looked through their websites and compiled the number of product subcategories for the 14 categories below.
Based on the chart, we found that Lowe’s has a higher number of product subcategories in 7 out of 14 product categories, which are tools, building materials and supplies, flooring, hardware, heating and cooling, storage and organization, and doors and windows. On the other hand, Home Depot has more number of subcategories in 4 product categories namely Automotive, Holiday Decoration, Kitchen and Smart Home. In the 3 product categories, both the companies were tied with the same number of subcategories, which are Bath, Plumbing, and Appliances. However, the total number of product subcategories across all 14 product categories is higher at 186 subcategories compared to 179 at Home Depot. We believe this highlights Home Depot’s advantage in having a greater number of product subcategories overall. However, Lowe’s is expanding its private brand portfolio with brands such as Allen + Roth and Steinmaster. Despite this, we believe Home Depot has an edge over Lowe’s with a greater variety of products to attract and serve customers.
Furthermore, we also compared these companies in terms of their product pricing. Similar to the previous factor, we compiled product list prices for 14 selected products for each category and calculated the price difference between them.
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Category Product Home Depot ($) Lowes ($) Difference Appliances GE 4.8 cu. ft High Efficiency White Top Load Washing Machine Flex Dispense and Sanitization with Oxy Energy Star 899 999 -11% Automotive Battery Extender 12-Volt 1, 200 Amp Battery Jump Starter 154 149 3% Bath Genta Single Hole Single-Handle Bathroom Faucet 263.85 292.62 -11% Construction Materials/Supplies Quikrete 20 lb. Hydraulic Water-Stop Cement Concrete Mix in Chrome 15.37 24.48 -59% Flooring Bruceplano Oak Gunstock 3/4 inch thick x 3-1/4 inch 4.39 5.29 -21% Hardware Tapcon 1 /4 Inch x 3-1/4 Inch Hex-Washer-Head Concrete Anchors (75-Pack) 31.98 31.98 0% Heating & Cooling 8,000 BTU Energy Star Window Smart Room Air Conditioners 249 319 -28% Holiday Decor 6 Foot Downswept Douglas Fir Artificial Christmas Tree with Clear Lights 250.55 323.99 -29% Kitchen Cross Loften All-in-One Dual Mount Drop-in Stainless Steel 33 Inch 2-Hole Single Bowl Kitchen Sink 429.95 419.95 2% Plumbing ISPRINGcountertop Multi Filtration Drinking Water Filter Dispenser 66.8 61.17 8% Smart Home TP-LinkAC1200 Wi-Fi Range Extender 49.98 49.98 0% Storage & Organization ClosetMade SuperSlide 48 Inch W x 12 Inch D Wire Fixed Mount Shelf Kit with Closet Rod 37.98 41.78 -10% Appliances DEWALTATOMIC 20-Volt MAX Cordless Brushless Compact 1/2 Inch Drill/Driver, (2) 20-Volt 1.3Ah Battery 159 159 0% Doors & Windows Kwikset Juno Satin Nickel Exterior Entry Door Knob and Single Cylinder Deadbolt Combo Pack with SmartKey Security 47.97 50.97 -6% avg – – – -12% Click to enlarge
In the table, Home Depot had lower prices for 8 out of a total of 14 products than Lowe’s. The average price of all products was 12% less than at Lowe’s. However, 3 out of 14 products had the same price. As such, we believe this can provide Home Depot with a pricing advantage for its products to make it more competitive and attract customers.
Lastly, both companies have large distribution systems to handle and fulfill their customers’ orders and purchases. We compared the distribution and logistics capabilities of both companies based on their delivery times and number of distribution centers to determine
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