Home Depot, leader in the American DIY market, is slowly leaving Lowe's behind. For the second time in three months, the latter had to issue a profit warning while the former announced to expect higher profits.
Lowe's low quarterly results
Lowe's results were below expectations in the second quarter of 2011. Turnover rose 1.3% to 10.1 billion euro, but on a like-for-like basis, sales went down 0.3%. Profits were marginally lower than one year ago, dropping from 579.3 to 578 million euro.
The group had to close seven unprofitable shops and lowered its expectations for the whole financial year (ending on 3 February) from 4% to only 2%. The only growth the chain really expects comes through the internet, highlighted by the opening of the Spanish language version of their website just this week. Another source of hope for Lowe's is the redecoration of its stores.
Home Depot growth causes Lowe's demise
Lowe's's downfall is caused largely by Home Depot's fierce competition, according to analysts. The latter was larger than Lowe's for the ninth quarter in a row, rising 4.3% worldwide. Total turnover was 14 billion euro, rising 4.3% worldwide. Net profits rose too, from 829 to 847 million euro. Unlike its main competitor, Home Depot confirms its expected growth of 2.5%.
Both Home Depot and Lowe's complain about the low consumer confidence in the US, causing many Americans to cancel their renovation plans. However, Home Depot did profit from spring sales and the damage caused by tornadoes.