What will Lowe's eliminate to deal with new retail pressure?

Joined: 14 Nov 2008 Posts: 36

In reading some of the retail data this morning, the question begs to be asked; Will Lowe’s close underperforming stores or cut corporate personnel? I have to believe the answer is probably yes to both do new appointments (Marshall Croom) to Risk & Loss Management. Clearly there is a shift occurring at the upper tier of Lowe’s corporate right now with this appointment. Given his background at Earnest & Young, then to Lowe’s, Finance, moving to SVP of Merchandising & now this, signals a more appropriate role for Croom. Also, he’s a CPA and will fit right in line with Robert Niblock. There really is nothing left to cut except underperforming stores & personnel at the corporate level. The corporate culture is about to take another shift and not for the better of individuals livelihoods unless they’re in the top 1% at Lowe’s. There really is nothing left to take except from inside. The good days at Lowe’s basically went away back in 2002 & now it seems like it will only get worse considering the market and the worst retail sales in 40 years.

Joined: 18 Jul 2008 Posts: 146 Location: Region 1

Things at Lowe's have gotten worse because of guys like Marshall Croom on the top tier. Here's a guy whose background is in FINANCE! Has no background in retail at all. He and Niblock probably talk shop all the time, but it's about accounting, not retail management. How does his educational background qualify him for Loss Prevention and store safety? This would be funny if it wasn't so sad.

I'm not sure we'll see Lowe's closing any stores in 2009, but who knows. They may have to. The economy is going to tank further at least for the first half of 2009 before we begin to see the start of any recovery. They just might cut back further from their proposed openings of 75-85 new stores. They've already propositioned this little "reorganization" plan roll-out which they think will streamline store operations and place more associates on the floor to bolster customer service. Teflon on teflon. Supposedly there will be no layoffs or firings of current employees because of this change in personnel deployment. We'll see.

Joined: 14 Nov 2008 Posts: 36

First, I appreciate the honest feedback & I don’t want to appear negative with my topic & post. I just remember a better Lowe’s in years past. I used to be a fan, but until there are severe changes needed at the top & when people like Larry Stone, quit stalking owners of former vendor service groups (another topic all together), then the corporate culture of “I’m better than you & I have to keep getting more” will fade away. The real firm question is can Lowe’s survive this recession with their current receding growth strategy? I never thought that I would see Lowe’s opening less than 100 stores per year. If you couple that with closing non-performers their actual store growth could be approaching less than half of what they’d projected annually just 1 year ago. This means that they’ve waited too long to react to the market. What’s bad is that they’ve taken away the individuality of the stores and replace with broad band approach to new & existing store set up, believing that the corporate office knows best about what sells in every market. It’s not that simple, but there is the looming question of can Lowe’s survive? In a period of time where sales are going to continue to be poor or negative, margins will only take you so far & if your basic operation costs hit 20-25%, you barely treading water.

Joined: 20 Aug 2008 Posts: 54

I do not believe Lowe's will close any stores in addition to the ones that may already be slated. Lowes historically continues to grab market share during economic slowdowns. If anything, this is a good time to get into new markets so when the economy bounces back, we are in a position to grab more market share.

Joined: 07 Jul 2003 Posts: 110

Joined: 22 Dec 2007 Posts: 461

As long as they can afford it they'd expand. Credit now is very tight so it depends as to the scale.

It might be a better time to look at buying up smaller chains (hh greg?, Rona?) than to make new stores. It's been a long time since eagle was bought out but it would be interesting to see them try doing that in more thin areas.

Also remember mexico is the next country to get stores.

Joined: 20 Aug 2008 Posts: 54

Joined: 15 May 2005 Posts: 89 Location: Georgia

Joined: 14 Nov 2008 Posts: 36

I’ve been involved with Lowe’s for just over a decade until a few years ago. I feel that my comments are justified based on my experience with them over the course of time & that the role that I played was to hopefully improve sales & solve day to day problems at the operational level. But in 2002, there was a severe shift in, what would be known as their corporate culture. This culture had been brewing for years & it only took less than five to fully implement changes that not only cost outside vendors millions of dollars but manufacturers as well. This change corrupted the control and execution of gross sales at the store level. Anyone that is in the game currently would have to agree that the store ultimately knows their market (store) better than merchant or SVP. Unfortunately, this unruly culture has removed a lot of great people with incredible experience throughout the ranks. It’s my opinion that this greed, now more than ever, has and will continue to negatively affect Lowe’s.

Joined: 14 Nov 2008 Posts: 36

For the record, Lowe’s or HD for that matter, has NEVER experienced and Recession like this, in fact very few us have. You’re really starting to see economies to scale in action with Circuit City as an example. When unemployment hits 10% and higher, people no longer have cash to purchase things they want & the ones that do are going to be thinking 18 months down the road because of confidence. Further, things you need typically cost a great deal more because most of the time it’s a durable good. With the credit crunch, the number of existing, but more importantly new buyers is going plummet because they just can’t get the funds that they need. Lowe’s is really going to understand that age old saying that CASH is KING in more ways than one. Just like for many of us on this form, Lowe’s in “no mans” land & they don’t have but so much cash. And Home Depot…they’re almost like a version Exxon Mobile with all their reserves. All I can truly say is don’t look at that pretty balance & P/L sheet that they kick out every quarter. Fourth Quarter results are going to be harsh.

Joined: 22 Dec 2007 Posts: 461

"Lowe’s in “no mans” land & they don’t have but so much cash. And Home Depot…they’re almost like a version Exxon Mobile with all their reserves."

What reserves? hd is doing far worse as they are closing stores. supposedly there's another round later this month. beating hd at something is just too easy and nearly meaningless.

bestbuy vs circuit city

borders vs barns and noble

two discounters near me that sell damaged and expired goods against each other

mcdonalds vs burgerking

petco vs petsmart

amazon.com vs buy.com

The list goes on and on. Customer loyalty is a thing of the past..

Joined: 15 May 2005 Posts: 89 Location: Georgia

Joined: 22 Dec 2007 Posts: 461

"Apparently you weren't around during the Carter years when unemployment was high, interest rates were 18%, and all he could come up with was to wear a sweater when it got cold."

One could make the argument that things were better back then because those high interest rates would at least provide a form of security for those on fixed incomes. CD's and savings accounts yielded far better returns.

Now things are inverted. We've tried way too hard in making housing rise. It's better to pay a high rate on a lower priced house than a low rate on a higher priced house.

It's easy to take shelter in an economic downturn if it's only in one or a few sectors. Say a crash in one form of energy or one industry. But not now.

When carter was president we didn't have a glut of 18 million empty homes in america just sitting there
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHHKvtb594Fs&refer=home

Joined: 14 Nov 2008 Posts: 36

well, mdovell, you make great points as always. No quesiton that you're 100% correct about the lack of customer loyalty. As far as the other gentleman (oldyeller) saying that I wasn't around during the Carter years, you're correct. Quite frankly, I wasn't even 10 when he was president. That being said, Lowe's didn't have ONE 85K store in operation and not for another 13 years. So when I say Lowe's has NEVER faced a recession like this...tell me something...am I lying? We are all in no-mans land right now. Every day I walk into my office (small business) I have to say thanks at the end of the day that I still have a job. Lately everytime I grab a cold frosty beverage at the local watering holes, 1 out of 5 people is either saying "I don't know what I'm gona do if I lose my job" or "I just got let go". Not a whole lot left over for residential DIY'ers...

Joined: 19 Oct 2003 Posts: 2801

Joined: 22 Dec 2007 Posts: 461

the thing is what usually happens in a downturn hasn't...usually we'd see higher rates...

In a nutshell after 9/11 we dramatically lowered interest rates...it created a housing bubble. Way too many people got arm's and way too many homes were made. People got underwater in their homes, in their cars (means to owe more on something than it is worth)

It came out in the middle of last year that Greenspans 1977 thesis stated
"There is no perpetual motion machine which generates an ever-rising path for the prices of homes."
http://bigpicture.typepad.com/comments/2008/04/greenspans-long.html

I don't think you are lying. It's hard sometimes to judge things in different times. Just like some might argue that the 50's was a nice time with more secure pensions and standards of living but at the same time there was a lack of civil rights, womens rights and gay rights.

Technology advances but after awhile it can wear thin. People are used to the internet now. It only took what...10-11ish years for people to use it..

unless there's either a huge increase in the population or a massive demolision of some of these homes I doubt prices will rise for awhile. I've seen the ARM reset schedual and it will totally end for the most part by the fall of 2012. but by then some will probably be retiring

Joined: 15 May 2005 Posts: 89 Location: Georgia

The 18% was what I wa s referring to when it came to borrowing money. Not to mention the gas lines and rationing. You youngsters just don't know.

Joined: 15 May 2005 Posts: 89 Location: Georgia

Joined: 14 Nov 2008 Posts: 36

No oldyeller, I nor anyone else in my company got fired, VSM manuvered the ability for Service Companies to represent manufacutures autominously away via Anti-trust. They forced service companies into a room (Lowe's) and then slowely picked them off. As you know today, there are no service companies involved in Lowe's stores other than new operations and a few re-merchandising ops.

Joined: 22 Dec 2007 Posts: 461

Technically they never did issue ration coupons it was usually a even or odd day. Then they did that red/yellow/green flag thing...

but we also had more industrial jobs and stronger unionization back then. If you got laid off at Ford you could get a job at AMC but not now. Heck GM owned Frigidaire for awhile.

There are higher and higher requirements for employment these days. It's a far more competitive marketplace.

Joined: 18 Jul 2008 Posts: 146 Location: Region 1