Lowe’s looks to store expansion, online marketplace to drive long-term growth and gain share

The news: Lowe’s cited optimism that sales growth will return next fiscal year but outlined multiple scenarios for its performance given the significant uncertainty over when the frozen housing market will thaw.

• In a “moderate” home improvement market, Lowe’s expects sales to rise about 1% YoY to $84 billion, it said in an investor presentation.
• Positive factors, including falling mortgage rates, could fuel a “robust market,” sending sales up 4% YoY to $87 billion.
• Negative conditions, such as a tariff-fueled inflation spike, could lead to a “weak market” in which sales dip 2% YoY.

The long-term blueprint: Lowe’s expects sales to rise 3% to 5% per year in the next three to five years once the housing market stabilizes. Cyclical trends, such as millennials having children and buying houses, baby boomers aging in place, and consumers tapping into home equity for improvements, could accelerate that growth.

Lowe’s also mapped its long-term blueprint to drive growth and gain share. It includes:

• Expand its physical footprint: Lowe’s plans to open 10 to 15 stores per year, which would help build its customer base.
• Broaden its selection in rural stores: The retailer plans to expand its product mix in about 150 additional rural locations by adding categories such as pet, workwear, and automotive supplies.
• Launch an online marketplace: The retailer launched an online marketplace that will enable it to offer more SKUs without having to carry inventory, manage pricing, or invest in additional fulfillment centers.
• Revamp its pro rewards program. The updated program, rebranded as MyLowe’s Pro Rewards, promises faster rewards, easier redemptions, and 5% daily savings on eligible purchases for customers using the MyLowe’s Pro Rewards Credit Card.

Our take: While the sluggish housing market continues to weigh on home-related retailers, Lowe’s is taking steps to strengthen its position once the current headwinds pass.

Go further: Read our analysis of Lowe’s and other major retailers’ Q3 results in our Retail & Ecommerce Earnings Q3 2024 report.

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