The Nearest Lowe&amp 39 S Home Improvement Store – In this analysis of Home Depot, Inc. (NYSE:HD) vs. Lowe’s Companies, Inc. (NYSE:LOW), we compared 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 the share of both companies’ market share in the home improvement retail market, revenue stream by geographic region and sales metrics, including sales per store and retail square foot, customer transactions and average ticket size.

We then compared both companies in terms of their service capabilities, where we examined their customer reviews on third-party review sites, product range based on their websites, average product price and distribution capabilities, and logistics.

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Finally, we examined their company’s profitability by looking at their gross, operating, and net profit margins, as well as their cash flows by FCF and company financial margins by net debt as a % of market cap and leverage ratios. credit.

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To compare the two companies in terms of their market leadership, we analyzed 3 factors which were their market share, geographic revenue, number of stores and sales figures.

In terms of home improvement retail market share, Home Depot and Lowe’s are two of the largest companies. However, Home Depot is bigger 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 edged out Lowe’s with a larger gain as its revenue was 8.4% compared to 7.19% for Lowe’s.

Moreover, based on their annual reports, both companies show a high concentration of revenue in the US, which accounted for more than 90% of their revenue in 2021, with Lowe’s having a slightly higher contribution to US revenue. Home Depot, on the other hand, had a slightly larger contribution to revenue from its international operations in Canada. Overall, we think both companies have a high risk of revenue concentration because their revenue lacks geographic diversification, being heavily dependent on the US, but Home Depot has a 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 may indicate the strengths of its business, including sales per store, sales per square foot, customer transactions and average size of the tickets.

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Home Depot Lowe’s Sales Figures Revenue 151, 157 96, 250 % Growth (10 Years) 8.4% 7.2% Store Sales 65.2 48.8 % Growth (10 Years) 8.1% 6.0% Customer Transactions (1 mln 760) , 002 Growth % (10 years) 3.0% 2.3% Average Ticket 85.9 96.1 % Growth (10 years) 5.3% 4.8% Click to enlarge

Based on the table, Home Depot had higher revenue than Lowe’s and a higher 10-year growth rate. Additionally, Home Depot outperformed Lowe’s in all sales metrics except average ticket size, with higher sales per store, sales per retail square foot and customer transactions. What’s more, Home Depot even had a higher 10-year average growth rate for all of these metrics. Therefore, we believe that while Home Depot had less store growth than Lowe’s, it focused on growing sales and transactions in its stores, which drove its revenue growth.

To estimate both companies’ revenue, we used 10-year average sales growth per store, which was down 1% per year, and store growth to get 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 2,35 6% Growth 2,33 6% 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% Income from home %34.1% 0, 225 132, 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% Store Decrease 1, 7 9 s , 971 1, 998 2 , 025 2,052 2,080 2,108 Growth % -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 48.5 48.5 5.9 5.9 5.3 5.3 5.3 5.3 th % 3.1% 24.4 % 7.6% 5, 0% 4.0% 3.0% 2.0% 1.0% Lowe’s Revenue (mln USD) 72, 148 89, 597 96, 250 102, 385 107, 874 112, 564, 17 % 61,93,17 % 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 because it has the largest market share in the home improvement retail market, slightly higher revenue exposure to international business, and better values of sales in terms of revenue growth, number of stores, sales per average retail square foot, customer transactions and average ticket growth.

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Market Leadership Advantage Home Depot Market Share Home Depot Geographic Revenue Home Depot Sales Figures Home Depot Total Home Depot Click to Enlarge

To compare the two companies in terms of their service capability, we looked at 3 factors which were customer reviews, product range, pricing and distribution and logistics.

To compare both companies in terms of customer service, we analyzed average customer reviews from Trust Pilot and identified the company with the best ratings.

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From the table, both companies had poor reviews on Trust Pilot, both below 2 out of 5 stars. Based on reviews, we have found that customer complaints relate to a variety of factors, including customer service. However, Lowe’s had a slightly better rating than Home Depot. We think this indicates a similar level of customer service for both companies, but Lowe’s is slightly better.

Furthermore, we examined the companies in terms of product mix to determine which company has an advantage in product variety. To compare their product range, we looked at their websites and compiled the number of product subcategories for 14 categories below.

Based on the graph, we found that Lowe’s has a higher number of product subcategories in 7 of the 14 product categories, which are Appliances, Building Materials & Supplies, Flooring, Hardware, Heating & Cooling, Storage & Organization, and Doors & Windows. On the other hand, Home Depot has a larger number of sub-categories in 4 product categories such as automotive, holiday decorations, kitchen and smart home. In 3 product categories, both companies were tied with an equal number of subcategories which are bathroom, plumbing and tools. However, Home Depot has a greater number of total product subcategories across all 14 product categories, at 186 subcategories compared to 179. We believe this highlights Home Depot’s advantage in having a larger number of product subcategories in total. However, Lowe’s has expanded its private label portfolios such as Allen + Roth and Stainmaster. However, we believe that Home Depot has an advantage over Lowe’s with a greater variety of products to attract and serve customers.

In addition to this, we also compared these companies in terms of the price of the products. Similar to the previous factor, we compiled the product listing price for 14 selected products for each category and calculated the price difference between them.

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Product Category Home Depot ($) Lowe’s ($) Difference GE Appliances 4.8 cu. ft. White High Efficiency Top Load Washing Machine with FlexDispense and Oxi Sanitization, ENERGY STAR 899 999 -11% Car Battery Extender 12 Volt 1,200 A Load Starter Battery 154 149 3% Bathroom Genta Single Handle Bathroom Toilet in Chrome 263.85 292.62 -11% Quikrete Building Materials/Brackets 20 lb. Hydraulic Water-Stop Cement Concrete Mix 15.37 24.48 -59% BrucePlano Flooring Oak Gunstock 3/4 in. Thickness x 3-1/4 in. Hardware Tapcon 1/4 in. x 3-1/4 in. Hex Washer Head Concrete Anchors (75 Pack) 31.98 31.98 0% Heating & Cooling 8,000 BTU ENERGY STAR Window Smart Room Holiday Air Conditioning 249 319 -28% Decorations 6 ft. Artificial Christmas Tree. Douglas fir with clear lights 250.55 323.99 -29% Kitchen KRAUSLoften All-in-One Dual Mount Drop-In Stainless Steel Single Bowl 2 Hole Kitchen Sink 33 Inch 429.95 419.95 419, 95 ISPRING Filtration 2% Drinking Water Filter Dispenser 66.8 61.17 8% Smart Home TP-LINKAC1200 Wi-Fi Range Extender 49.98 49.98 0% Storage & Organization ClosetMaid SuperSlide 48 in. L x 12 in. D. Cabinet Rod Fixed Mount Shelf Kit 307.98 – 1 40.98 in. DEWALTATOMIC 20 Volt MAX Brushless Compact 1/2 in. Drill/ Driver, (2) 20 Volt 1.3Ah Batteries 159 159 0% Kwikset Juno Doors & Windows Satin Nickel Exterior Entry Door Knob & Single Cylinder Pack. 50.97 -6% Average – – – -12% Click to enlarge

In the table, Home Depot had lower prices for 8 of the 14 total products than Lowe’s. The average price for all products was 12% lower than Lowe’s. However, 3 of the 14 products were the same price. Thus, we believe that this could give Home Depot a price advantage for its products to make it more competitive and attract customers.

Finally, both companies have large distribution systems to manage and fulfill their customers’ orders and purchases. We compared the distribution and logistics capabilities of both companies based on lead times and number of distribution centers to determine which

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