Lowe's cuts store growth plan for 2009

ATLANTA — Lowe's Cos. Inc. backed its 2008 full-year profit forecast Wednesday, but said it would open fewer stores next year as the soft U.S. economy and housing slump hampers demand.

The second-largest home improvement retailer behind Home Depot said it would open 75 to 85 new stores in 2009, down from about 120 it expects this year.

“While a pullback in the pace of our expansion is appropriate given the pressures in many markets, we continue to see opportunity for new store growth in the years ahead,” Gregory Bridgeford, Lowe's executive vice president for business development, said in a statement.

Lowe's, which is holding an analyst meeting Wednesday, reiterated an August forecast calling for profit of $1.48 to $1.56 (U.S.) a share for this year. That would be down from $1.86 a year earlier.

For 2009, Lowe's forecast profit of $1.40 to $1.65 a share.
Analysts currently expect profit of $1.53 a share for 2008 and $1.57 a share for 2009, according to Reuters Estimates.. . . more

Lowe's Drops Plan For Canton, CT Site

Lowe's has pulled the plug on its plan to build a store and garden center on a 24-acre parcel just off Route 44 near the Avon and Simsbury lines.

Lowe's won approval earlier this year to build a 119,328-square-foot store with an attached 27,265-square-foot garden center and a 437-space parking lot.

A combination of the deteriorating economy and a challenging building site appear to have killed the plan, said Tom Sevigny, president of Canton Advocates for Responsible Expansion, which fought the project.

Maureen Rich, a spokeswoman for Lowe's, said Monday night that a variety of factors led to the company's decision. "After further evaluation, Lowe's has decided not to move forward with the project," Rich said. . . . more

Lowe's to slow openings?

Lowe's Cos. this week could announce it is slashing new-store growth in light of the tough business environment, calling into question whether the home-improvement retailer can achieve its long-term targets.

As the slump in housing markets and economic pressures weigh on profitability of new stores, Lowe's could cut next year's square-footage growth by as much as 50% from recent targets, according to several analysts tracking the company.

Citigroup analyst Deborah Weinswig expects Lowe's will open 75 new stores next year for 4.5% growth in retail-square footage, down from 120 stores opening this year to generate about 8% growth. . . . more

Lowe's grows in downturn

Amid a national housing crisis, the No. 2 home improvement store shows it has the right marketing tools to attract a greater share of customers.


If you think you've been going to Lowe's more in recent years, or simply considering it more – well, it's probably not just your suspicion.

Even as the downturn in housing has hammered home improvement stores, the Mooresville-based chain is claiming a growing share of the market, and aiming for more. That comes as its chief rival, Home Depot, has seen its market share slide and is working to recover, and as smaller competitors go under, too.

In a tough climate, the gain is a bright spot for the nation's second-largest home improvement retailer: If the pie isn't getting much larger, at least at the moment, it helps to claim a bigger slice.

“The key for home improvement retailers during this time is to keep shoppers coming to the stores, and I think Lowe's is doing a good job trying to focus their marketing message on smaller needs,” said Nick McCoy, a home improvement analyst with TNS Retail Forward, a Columbus, Ohio-based retail consultancy.

Lowe's CEO Robert Niblock said recently he can see the company eventually having 2,500 stores in the United States, up from about 1,575 now. Even so, Lowe's still has a long way to go before it's larger than the orange-aproned competition – nor is that necessarily a realistic goal, Lowe's President and Chief Operating Officer Larry Stone noted in an interview last week. . . . more

Goldman Sachs upgrades Lowe's to buy

Sept 2 (Reuters)- Goldman Sachs upgraded Lowe's Companies (LOW.N: Quote, Profile, Research, Stock Buzz) to "buy" from "neutral," citing in part a stabilizing housing market.

The brokerage said housing turnover declines moderated again in July to 15.5 percent from 17.9 percent in June, the fifth consecutive improvement and the smallest drop since July 2007.

Declines in existing home sales slowed to 12.4 percent from 15 percent in June, it noted.

Goldman, which raised its 12 month price target on the company by $1 to $28, said the company and street expectations still appear reasonable after a strong second quarter.

Shares of Lowe's closed at $24.64 Friday on the New York Stock Exchange.

Source: Reuters

Big-box retailers undaunted by slow economy

LOS ANGELES (MarketWatch) -- Can big-box retailers keep growing briskly, given the current downturn in the economy? For the most part, yes, but it depends on what's inside the box.

While a select few retailing giants -- namely home-improvement retailers -- have had to curtail expansion plans, others are continuing as if recession talk is nothing more than idle chatter.

Companies like Target Corp. , Costco Wholesale Corp. and Best Buy Co. are carrying on with expansion plans at virtually the same pace as in years past.

"We continue to look at a standard of 100 net new stores a year," Target spokeswoman Anna Goeppinger said. In fact, Target's rate of expansion has quickened, as it built 118 new stores last year and is on pace for 116 this year. In 2005 and 2006, the company added 86 and 88 new stores, respectively.

For the most part, today's retail giants don't suffer in the same way that most retailers do when gasoline prices climb and pocketbooks get pinched. While they may make adjustments, they're big enough to absorb the shock, according to industry experts.

"They really are looking through the economic time because their stores will open after the bad economic times have passed," said Jim McComb, president of retail consultancy McComb Group based in Minneapolis, home to Best Buy and Target headquarters.

The biggest box of all, Wal-Mart Stores Inc. , is curtailing its expansion efforts, although company executives insist that it's not recession-related. The world's biggest retailer is beginning to saturate the North American market, so now it's looking to grow more quickly overseas.

Wal-Mart said as recently as October that it plans to completely phase out new construction of its conventional outlets by fiscal 2009 in favor of its grocery/discount-goods supercenter stores. Development of all new Wal-Mart outlets, including Sam's Club and its group of neighborhood markets, will eventually be cut to 190 by fiscal 2010, down from the 340 new locations that were opened last year.

The subsiding-expansion plans were formulated several years ago and there are no plans to alter them, said Wal-Mart spokesman Phillip Keene, even though economic conditions have worsened since they were outlined six months ago. In fact, the company is stepping up its international expansion efforts at a fairly brisk clip. "There's been no change from this outline," Keene added.

Home-improvement blues

That hasn't been the case with two major big-box home improvement retailers. Home Depot Inc. and Lowe's Cos. are feeling the pinch as the real-estate market drops and new-home building subsides.

Last month, Home Depot scrapped plans to put its first-ever store in San Francisco despite wrangling with reluctant city officials for nearly a decade. In 2005, the city's Board of Supervisors had approved the construction of a Home Depot, but the company backed off in light of rough economic conditions.

"We evaluated the deal and found that it no longer worked for us," said Home Depot spokeswoman Sarah Molinari.

Home Depot has curtailed much of its new-store building throughout North America, cutting back to 55 new stores this year from 100 last year. Capital-expenditure spending will be down 32% from a year ago, to $2.3 billion.

The company is looking to spruce up its existing stores and find ways to improve service, as well as invest in its supply chain, according to Molinari. She also said that much of the curtailing in Home Depot's expansion activity is that like Wal-Mart, the company is reaching market saturation.

At one point, Home Depot was building 200 new stores a year, Molinari elaborated.

That kind of pulse-quickening expansion is unlikely to return, it appears. "I just don't think we're at that point in our business. I think we're past that point," she added.

Lowe's, on the other hand, still is growing rapidly, though it has delayed the opening of 20 new outlets this year in markets where the housing crunch is acute, said spokeswoman Chris Ahearn. Most of the delays are in California and Florida markets.

The company still plans to open 120 other stores, she noted. Lowe's would not reveal precisely where it is holding off on construction. "Again, they're delays. We're not canceling stores," Ahearn said. "We still have an aggressive expansion plan."

Markets that didn't experience a massive housing bubble, such as Texas and Oklahoma, are still ripe for new properties. Lowe's has 1,525 outlets in all.

Urban problem

Home Depot's San Francisco experience exemplifies the dilemma now faced by home-improvement centers. Buying or leasing land in pricey urban areas will cut deeply into their return on investment, said Craig Johnson, president of Customer Growth Partners, a retail consultant.

When economic conditions weaken, that takes a lot of steam out of a Home Depot or Lowe's that is looking to venture outside its comfort zone of suburban strip malls.

"Even in good times, it's a reach," Johnson added.

Companies that seem to be clinging to good times are Best Buy, Costco and Target. Best Buy said that it could stand to build another 500 stores in its various markets, so it plans to open 130 to 160 of them over the next fiscal year. That's about the same pace at which Best Buy has grown over the past several years, according to company spokeswoman Sue Busch.

Best Buy is hoping to use the current economic situation to its advantage and to expand its market share as some of its rivals retreat. "Right now, this is where the focus is," Busch said.

Its main competitor, Circuit City Stores Inc., has seen its stock price tumble, and it has become a takeover target for Blockbuster Inc.

"Smart retailers will use down markets as the most cost-effective time to build market share," Johnson commented. "I think Best Buy is doing a very good job of this."

The same goes for Costco, Johnson said. The membership-warehouse retailer may be seeing its nonfood sales drop, but its food and low-price gasoline have grown more attractive to consumers.

The company plans to open 30 to 35 new units this year and to relocate 10 more stores, spokesman Bob Nelson said.

Costco should continue on that pace in the foreseeable future. "We have no plans to curtail next year," he added. "We're cautiously optimistic that things are going to get better."

Source: MarketWatch.com

Lowe’s Ground Lease Trades for $13M

WHITEHALL, PA-A 14.3-acre ground lease for a 166,609-sf Lowe’s Home Improvement Center has traded here for $13.2 million. The cap rate was 6.05%. Brad Nathanson, a senior associate and director of Marcus & Millichap’s National Retail Group in Philadelphia, and Jordan Muchnick, an investment specialist also in the firm’s Philadelphia office, represented the seller and the buyer.

According to Nathanson, the buyer was a regional entity; the seller was a national shopping center developer. The legal owner of the property before the trade was Whitehall Newman Associates. The new owner plans to leverage the site’s main selling points, Nathanson tells GlobeSt.com: a rare infill location in this submarket that can accommodate 166,609 sf and that is occupied by a creditworthy tenant. There were between 10 to 20 bidders for the property.

Located at 2650 MacArthur Rd., the property is situated on Route 45, a six-lane highway that is Lehigh Valley’s main retail corridor. “It is difficult to find available acreage of that size on that particular stretch,” he says. Also, “there are few creditworthy big box ground leases that aren’t owned by the tenant themselves.” Lowe's has signed a 20-year triple net ground lease for the space. Originally the property had been a Levitz Furniture store that was vacant when the developer acquired it. Lowe's opened its doors in October, Nathanson says.

Source: GlobeSt.

Lowe's to Delay Store Openings But Remains Optimistic in 2008

CHARLOTTE, N.C. — The chief executive at Lowe's Cos. said Tuesday that a soft housing market and tight credit standards has created a tough sales environment, but he remains optimistic the conditions will improve.

Lowe's President Larry Stone told analysts the economic downturn is affecting the entire housing sector. But Stone said the company can't wait for the "housing gods to help us," so steps are being taken to improve profit.

Company officials plan to delay the opening of about 20 new stores this year in several hard-hit markets, including California and Florida. Lowe's also will take a more conservative staffing approach as it hires seasonal workers to prepare for the busy spring season.

"We're not going to sacrifice long-term success to drive short-term results," Stone said. "For example, we're not going to cut staffing in our stores to the point that it impacts service. But we are managing payroll to the current sales environment."

Lowe's is the nation's second-largest home improvement retailer. Last month, the Mooresville-based company reported that its fourth-quarter earnings dropped by 33 percent.

The nation's faltering economy has been hit with a record number of foreclosures, higher gasoline prices and talk of a recession. Stone said the "doom and gloom" has trickled down to consumers who are reluctant to spend money on big projects. He said the company is looking for a "ray of hope" in dampening markets.

And maybe a break in the weather. Lowe's lawn and garden sales were hurt by the lingering drought in the Southeast, he said.

"Eventually, the housing market will turn around and I'm confident the decisions we're making are the right decisions for our customers and shareholders," Stone said. "While no one enjoys slowdowns, it's been an education process. We've had to analyze everything we do and it will make Lowe's a stronger company in the future."

He also said there were opportunities for the company to grow, noting that Lowe's has stores in all 50 states, Canada and Mexico.

The Home Depot Inc., Lowe's biggest rival, is facing similar problems. The largest home improvement retailer in the U.S., Home Depot saw its fourth-quarter earnings decline 27 percent.

Stephanie Hoff, a senior retail analyst with Edward Jones, said home improvement companies face tough sledding in 2008.

"I have less reason to be optimistic than Larry Stone. We have no underlying evidence yet that the housing market is done correcting. While I think both Home Depot and Lowe's are doing what they can to navigate well through a very challenging environment, I think we just simply can't be more optimistic about the overall industry until we see clear signs that the credit crunch is over and the recession is shallow and short-lived," Hoff said.

She said tightening credit is especially hurting home improvement retailers.

"I think when Lowe's talks about big ticket items being down this year, part of the reason that's happening is because the access to credit for most consumers is harder to come by. Most people would either refinance their homes or tap into a home equity loan to be able to finance a $30,00 kitchen remodel. Now it's harder and more expensive," she said.

Source: WRAL