Home Depot and Lowes

Topics: The Home Depot, Economics, Robert Nardelli Pages: 2 (448 words) Published: July 18, 2014
Case Summary
Value Line Publishing analyst, Carrie Galeotafiore had followed the retail building-supply industry for approximately three years. Within a week the investment-survey firm will be publishing Galeotafiore’s quarterly findings on the industry along with the five-year financial forecast for the industry’s leaders, Home Depot and Lowe’s.

In an effort to increase their top and bottom-lines, Home Depot and Lowe’s have implemented strategies like improving customer service, attracting professional customers, and introducing a more favorable merchandise mix. Combined sales from the two companies accounted for more than a third of the industry’s sales. In the mean time, smaller hardware stores struggled to remain in the game. Galeotafiore reports shows confidence in the methods Home Depot deployed to achieve their goals and attributed Lowe’s margin expansion to their thrust into the major metropolitan markets. This case will mainly focus on the strategic issues involved with Home Depot and Lowe’s, the industry trends, the financial outlook for the respective companies, and whether or not Galeotafiore has the depth of knowledge and experience to make a correct call on the companies’ performance.Finally, the report will be substantiated with financial ratios comparing one company with the other, showing possible alternatives and proposing recommendations.

Case Analysis
This segment will narrow down the major issues of the case, along with the quantitative perspective showing historical trends and the projected level 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 Lowe’s 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. Strategic issues for Home Depot and Lowe’s

Home Depot’s CEO, Bob Nardelli’s...
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