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I have worked in an executive financial capacity (CFO) for more than 25 years. In 2005, I became a serious student of the market to gain a better understanding of successful investing/trading. I began my blog, The Perplexed Investor, to provide an honest narrative of my process. My blog and my... More
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  • Home Depot and Lowes 3 comments
    Dec 28, 2011 10:15 PM | about stocks: HD, LOW

    This post can be filed under, "Wondering Out Loud" on the big box home improvement stores, Home Depot and Lowe's.  On two occasions I went to Home Depot (NYSE:HD) during T-1 and T-2 days before Christmas.  I had the same experience with Lowe's (NYSE:LOW) just a week before Christmas.  Each time and each place, there were more salespeople in the store than customers. While one generally appreciates attentive service, sometimes "Can I help you find something?" is not a question I wish to answer every 2 minutes as I change aisles.

    Lowe's earns kudos for merchandising their product.  The Home Depot format obscured the product offerings, and their pricing was not nearly as competitive as Lowe's, nor were their product offerings as wide in some categories.  I did score a Makita hammer drill at Home Depot for a terrific price, but it was in the clearance section.  Lowe's had several brand name, high end tools marked down to "too-low-to-walk-away-from" prices.

    Not too many years ago, Home Depot (and Lowes) were singular stores in cities...now there are as many as 4-5 stores within a 20 mile radius.  Let's take a look at the weekly charts: (click images to make larger)


    Dividend payments and more consumer optimism have certainly buoyed stock prices, and both companies have been buying back stock.  However, ultimately the business model revolves on attracting foot traffic + sales. 

    Common sense tells me that I should have had to wait in a line to pay for my goods or have gone in search of a sales associate during this time of year. Should all of the customers be part of the army of internet shoppers, surely the large box footprint will weigh heavily on those on-line margins.  It will be interesting to see how the sales comps come in.  Perhaps my experience is local  Richmond, VA.  We must be on guard to making generalizations from limited specifics.  Nevertheless,  the comments from everyone this season echoed my own experience: "there are not too many shoppers out."

    Ultimately, common sense prevails.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: HD, LOW
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Comments (3)
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  • think for once
    , contributor
    Comments (51) | Send Message
    both hd and low are losing customers and sale thus profits too!


    I know many who go to these store to see and touch and even work the item or tool--
    Then GO HOME , use their notes and GO ON LINE for better pricing and FREE SHIPPING!!
    guess that is why both big boxes have way too many stores.
    21 Jan 2012, 03:03 PM Reply Like
  • think for once
    , contributor
    Comments (51) | Send Message
    great and truthful comment
    21 Jan 2012, 03:03 PM Reply Like
  • think for once
    , contributor
    Comments (51) | Send Message
    when in 2012 will HOME DEPOT ANNOUNCE A STOCK SPLIT?
    9 Mar 2012, 09:55 AM Reply Like
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