Lowe’s (LOW) Rides on Solid Demand & E-commerce Offerings

Players in the home improvements market, including Lowe’s Companies, Inc. LOW, have been gaining from consumer’s enhanced focus on home refurbishing and remodeling activities amid the pandemic. In fact, higher demand across most merchandising categories and strong online services are supporting Lowe’s performance. Markedly, this Zacks Rank #3 (Hold) company’s shares have gained 11.7% in the past three months compared with the industry’s rise of 7.1%. That said, let’s take a closer look at the aspects acting as aces in Lowe’s stack.

Favorable Home Improvements Market

With majority time being spent indoors due to the pandemic, there is increased focus on making homes an enjoyable and comfortable space. Consumers have been investing in making homes well equipped for work-from-home, remote schooling and entertainment needs. Moreover, do-it-yourself (DIY) projects for remodeling, decorating and maintenance of furniture and fixtures are being widely undertaken.

During fourth-quarter fiscal 2020, Lowe’s U.S. home-improvement business witnessed comparable sales (comps) growth of 28.6%. This was fueled by broad-based growth across all merchandising departments, DIY and pro customers as well as growth in store and online. In fact, all 15 merchandising departments delivered positive comps, exceeding 16%. Growth in lumber was the strongest. Moreover, the company witnessed growth in areas such as lawn and garden as well as seasonal and outdoor living.

Lowe’s is also gaining traction with the newly-introduced Total Home strategy that includes providing complete solutions for various types of home repair and improvements needs. The total home strategy is expected to boost market share by accelerating investments in pro-related offerings, installation services, localization as well as boosting product assortments.

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Sturdy E-commerce Wing

Lowe’s is witnessing solid growth in its online platform, owing to consumers’ growing inclination toward digital shopping and the company’s efficient omni-channel offerings. Apparently, sales in Lowes.com increased 121% in fiscal fourth quarter. Higher demand from DIY and pro customer is contributing to the company’s online sales.

In order to meet high online demand, the company has been strengthening delivery capabilities. In this context, it is bolstering curbside pickup services and is on track with installing Buy Online Pickup in Store touchless lockers across all U.S. stores. The company is also focused on enhancing customers’ online shopping experience by improving features like search and checkout. Going ahead, management believes that its online business model has tremendous potential to grow, backed by an efficient technology team and superior cloud-based platform.

Wrapping Up

The home improvement products markets is expected to keep gaining in 2021, as work-from-home trends persist along with other supporting factors like rapid urbanization. Such upsides along with sturdy e-commerce channel and a compelling product assortment of well-known brands are likely to help maintain Lowe’s footing in the home improvements arena.

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