It is coming down to one thing for Lowe’s (LOW), market share.
Lowe’s continued to capture market share in Q1. During the quarter, they gained 70 basis points of total unit market share according to third-party sources (gained unit market share in 15 of our 19 product categories).
Larry D. Stone, COO
“I am also encouraged by our draw rate, or the number of times Lowe’s [was in the consideration set] of customers buying the products we sell. Of our 19 categories, draw rates improved in 17, stayed flat in one, and declined slightly in one in the first quarter. These solid results suggest that we are moving ever closer to achieving our vision of become the customer’s first choice for home improvement.”
Other Notes:
* No shares repurchased in the first quarter and our current plans do not contemplate any share repurchases for fiscal 2008.
* Cash flow from operations exceeded $2.5 billion, which represents a $399 million, or 18.7% increase over Q1 2007
* Expect diluted earnings per share of $1.45 to $1.55 for the year.
* Saw improvement in the negative comps in Gulf Coast and Florida over 2007 and that improvement continued into the first quarter of 2008.
It was more than a little disappointing that not a single question on the call from the “analysts” dealt with market share. Rather they focused obsessively on comp. sales. Guys, they will not be good until housing turns, unless you have a crystal ball that tells you when that will be, move on and ask something important.
Market share is what matters here. In a two horse race and this is essentially what it is, the company that performs the best when the environment improves will be the one gaining a larger piece of the total pie. With quarter after quarter of market share gains and now consumer awareness ones also, the winner will clearly be Lowe’s.
With both HD and Lowe’s trading at essentially the same premium to earnings, if one is looking to invest, where would you put your money? The company closing locations and losing market share or the one gaining share and opening new locations at a disciplined rate? Would you invest in the one with a clearly defined plan from management or the one who seems to make decisions based on what they see today?
Me too..
Full earnings call transcript here:
Disclosure (“none” means no position):
