For analysts looking at the financials for Lowe's, the home building materials supplier, the biggest surprise for many was wider profit margins. Reasons for the better profits: Investments in distribution systems are paying off; less was spent on promotional sales; sales shifted to a more profitable product mix; and also theft--what retailers call "shrinkage"--was down.
More good news: Lowe's expects same-store sales to stop sliding and come in flat in the third quarter. Deutsche Bank analyst Mike Baker says that "this tells us that trends have bottomed" for Lowe's. (Deutsche Bank owns and makes a market in Lowe's stock.)
Analysts and Lowe's executives say the retailer is still winning customers away from Home Depot.
Analysts say customers prefer the service at Lowe's. Home Depot is spending money to improve customer service, but Lowe's has a big head start.
Source: Business Week, http://businessweek.com
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