Home improvement retailer, Lowe's Companies Inc. (LOW) hit a 52 week high of $54.34, yesterday, before closing a notch lower at $53.86. Moreover, year-to-date shares gained over 10.3%.
Rise in home improvement spending as well as the company’s extensive merchandising initiatives helped the company to lift its financial performance resulting in a bullish run on the index. The housing sector is poised for a strong recovery after being stalled by inclement weather in the initial part of the year.
In fact, according to the latest U.S. National Association of Home Builders data, homebuilder sentiment in September was at its highest ever since the past nine years as a strong job market continues to boost home improvement spending. Going forward, analysts believe that recovery in the housing sector will continue and augur well for home improvement retailers, including Home Depot Inc. (HD), Builders FirstSource, Inc. (BLDR) and Lumber Liquidators Holdings, Inc. (LL).
Apart from the improving macro factors, Lowe’s has taken up internal overhauling aggressively. The company has put in place several growth initiatives to improve its performance. The company is closing its underperforming stores, which along with its strategy of enhancing customer-shopping experience and merchandising transformation is likely to generate incremental sales. The company has reset product differentiation in 1,400 stores and intends to extend it to the remaining stores by end of fiscal 2014. We expect these initiatives to impart the company a competitive edge.
All these factors contributed to the company’s second-quarter fiscal 2014 top and bottom line results that topped the Zacks Consensus Estimate, while rising 5.7% and 18.2% year over year, respectively. Additionally, comparable-store sales increased 4.4% on a consolidated basis in the quarter.
A special mention for the ProServices business (which focuses on Pro customers business needs) that continues to excel and is expected to perform consistently well going forward. As a step toward improving its e-commerce, Lowe’s re-launched its website www.lowesforpros.com after considerable modifications.
At present, Lowe’s is a Zacks Rank #3 (Hold) stock.
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