This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
There are many contrasts between The Home Depot (NYSE: HD) and Lowe's (NYSE: LOW), both of which sell a broad range of tools, fixtures, fittings, garden supplies, and construction materials to do-it-your selfers and professional contractors alike. Home Depot is the original big-box category killer of a hardware store that displaced many a mom-and-pop shop, as well as its predecessors, like Builders Emporium. Lowe's, the new kid on the block has been growing like mad with Home Depot's business in it's cross-hairs.
Both companies have been suffering mightily in the face of the housing slump and the crushing financial markets. Eventually, recession or not, both companies will see their revenues improve as the economy works through it's nightmarish problems.
I have written numerous stories on Home Depot in the past two years, and each time comparisons to Lowe's comes up. Lowe's has not yet had time enough to tarnish its reputation, and Home Depot certainly appears to have misjudged its upstart competitor, as well as recruiting the wrong CEO (Robert Nardelli) and then paying him $200+ million to go away. They have also allowed the stores to become drab and not listened or focused enough on customer or employee issues.
This was beginning to change for the better when the burden of a sagging construction industry expanded.
Home Depot has been trading between a low of $23.77 and and a high of $41.19 over the last 52 weeks with the highs a distant memory. More recently over the past nine months the stock has been hovering around the mid to high 20's.
Lowe's has not been doing much better but has been trading in a tighter range between $19.94 and $33.19, and most recently in the mid 20's.
Both companies have current P/E ratios around 13 and forward P/E ratios projected at 16. This means that based on company projections and Wall Street sentiment Lowe's is not getting any premium based on better growth opportunities. For investors seeking some dividend compensation Home Depot's 3% yield beats out Lowe's 1% yield. In a stagnant market that can be very important but once the market picks up trading 2% yield against a Lowe's faster growth rate might be a mistake.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of HD or LOW.
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Reader Comments (Page 1 of 2)
4-29-2008 @ 10:29AM
Colin Diamond Daniel said...
Home Depot stores are dirty, merchandise is always in disarray, never have enough inventory, employees are stressed out and want to go to Lowes for a better job,
Every Lowes store I have been in has been clean, well lit and with everything I want is in stock, Home Depot needs a complete revamp
4-29-2008 @ 10:26AM
David said...
Home Depot has completely lost their edge - the author of this article is 100% correct. HD stores are generally dirty, lack any type of customer service (in fact I've run into so many rude HD employees that I refuse to shop there anymore). Lowes has a MUCH better store design, bigger major appliance center, a better trained and friendly employee base, and overall a more positive "feel".
4-29-2008 @ 1:52PM
F.DELUCA said...
I LIVE IN LOWER KEYS IN FLORIDA & WOULD LOVE TO HAVE A LOWES DOWN HERE
4-29-2008 @ 2:34PM
dan said...
the big problem with home depot is that the 2 original start up people left the co,and hd hired bob he ran the co into the ground in less than 5 years by running it like a corporation and not a mom and pop store,like employees were treated when co started!!!!!!!!!!
4-29-2008 @ 2:49PM
Lisa said...
After 14 years with HD, including the last 5 with Nardelli in charge, I totally agree with this article. I left with a some uncertainty about the future but once I was gone I felt as if a huge weight was removed. Employees are treated like non-human machines. There is no regard for family life and no fair compensation at review time for a job well done. A 30 cent raise is considered "good"! This treatment is then passed on to the customers, as unfair as that may be. I can't speak for Lowes but I can tell you that HD needs lots of "home improvements" of their own!
4-30-2008 @ 7:40PM
Ann said...
I agree with David about the rude employees at Home Depot. I've been to several of them in different cities and have had the same rude experiences. I love Lowe's since their employees are friendlier and the stores cleaner. Won't go back to Home Depot.
5-01-2008 @ 12:50PM
vectange88 said...
i'll tell you something i worked for home depot for a full year in tampa florida and i'll tell you that home depot is only worried about its customers(i was a supervisor in the gandy store) i learned alot from home depot and they have great classes that associates must attend, to learn product knowledge and how to give great customer service. But hd cant forget to take care of its employees too. I now work for the hd in long island city, NY and ill tell you i feel like choking out every customer i see, not because of the customers but because of the lack of interest their has been with putting aprons on the floor and the fact that managers are only interested in making bonus but care nothing about their associates!!
5-01-2008 @ 6:24PM
Dennis said...
The difference in the condition of the stores and associate relations with the customers is due to the fact that Home Depot caters more to the Tradesmen while Lowes caters to the do-it-yourselfers and families
5-01-2008 @ 6:26PM
boyce4d said...
I Have an Interview with Lowes tomorrow, It,s a management position, I feel lucky..... I think.
5-01-2008 @ 7:29PM
Slim said...
Hmm, I take exception to the author calling Lowes a young upstart company! Lowes was founded in 1946, HD not until 1978, and was actually modeled after what Lowes was doing at the time, offering more than just hardware. At the time lowes was struggling, and the HD coming along was actually a boom to their business! Remember Bulider's Square, & Scotty's? HD got together with a proposal for equal territories, insuch that you have stores here, and the rest of us won't build in that area. Lowes would have no part in it, guess who is still at it after 60 years!
5-01-2008 @ 10:36PM
Sheldon L said...
OK Slim,
Perhaps reinvigorated rival, or come from behind challenger, or successful upstart or...
5-02-2008 @ 4:53AM
ross poling said...
Now you have a new company out there that will give both a run for the money Menards. What I have seen they will kill both HD an Lowes.
5-02-2008 @ 8:48AM
chris said...
I agree with Lisa, I have been with HD for 8 yrs.In that 8 years, I have noticed that it's all about the manangements bonus,I.E. SCOP Every mon. in staff it's not about why is morale so low, it's about why are we not making plan. or even better, why are we not getting more CREDIT CARDS? Our manager isn't even 32 yrs old. My gosh, I have a college degree and know more about business management than him. This just goes to show you, that it is WHO YOU KNOW, not WHAT YOU KNOW.As of yesterday we have lost all H.R.'s in all of the stores. This ought to be real intresting to see if this so called"manager" can really handle a situation or not. I am D.H. and I know that we, as D.H.'s have the hardest job in any store. And when reviews do come each year ,they don't recognize your yearly efforts, or goals you have achieved. I am moving on soon. Guaranteed. I was solicited by the Lowe's store manager 3 times recently, and I tell you it sure is looking good right now.
5-02-2008 @ 9:07AM
b.m. said...
I agee with lisa and chris, I am also a dept.supervisor, in rural south fort worth,tx.I have been with this company for about 4 years,and my manager is also real real young.He is never at work and always expects the ASM's to delegate every project to us D.H.'s. We also have a new D.M. who is a total Hitler who never sees the good ,but can always point out the worst. But it is always about the Credit and Sales plan and the managers bonus. In staff last week ,our manager made us feel guilty, because we were not making our sales for the quarter, and emphisized that he would not be getting his bonus if we didn't step it up NOW.He said he would not tolerate this.He said do you think it's right for you guys"D.H.'s to get at least the minumum amount of bonus and that the salaried group of managers get nothing? I am also looking for other employment, this store is stressing me so bad my wife has even threatened to leave me.Drive to Cleburne for yourself, stand back and just look around the store, tell us how YOU feel."WHAT MORALE"?
5-02-2008 @ 10:06AM
Tom Jackson said...
As a thirty year pro in the constuction industry, I agree, Home Depot has gone to pot. When they first came around, they were pretty good. But now, their stores are a mess, customer service seem to be a bunch of dis-spiritted morons that have no idea what they are talking about, (for the most part), and they never sem to have what I want anyway- it takes too much time there.
My wife took a job in HD a couple of months ago, she too is a construction pro with many years of experience in a specific area, but they treat here like a stock-boy/janitor. I want her to find another job. They have no concept of family life, (I work out of town and even though she explained this in her interview and they told her it was limited weekend work, they have made her work virtually every weekend). When she confronted her manager about what she was told at hiring and what her reality had become, they just made her do more weekend work. I don't see her being there long, I hope she can find a new job soon.
As for me, even though my company provides me with a HD card, I rarely , (and now after seeing how their employees are treated) will never use it any more. We have an account with Lowes and other suppliers and I will give them my companies business.
5-02-2008 @ 11:37AM
CHARLES WALTZ said...
I USE TO LOVE HD. I NOW DO MOST OF MY BUYING AT LOWES. LOWES SEAMS TO BE A BETTER STORE AND BETTER ARANGEMENT.
I ALSO DISLIKE HD FOR KEEPING TONY ON AS THERE DRIVER. HE IS A VERY POOR REP. FOR THERE STORES. I ONLY GO TO HD WHEN I CAN'T FIND WHAT I WANT AT LOWES OR VALUE STORES.
5-02-2008 @ 4:05PM
Tim said...
If this man knew anything he was talking about he would mention that Lowes, as a company started in 1956 (over 50 years ago). The Home Depot started in th late 70's, so who is the new kid on the block? Also THD just closed 15 stores and put off building 50, and still has no threat of losing market share or dominance to little Lowe's.
5-03-2008 @ 1:40AM
Boo said...
Ever since HD logo first appeared on a Toy car I have done 100% of my shopping at Lowes over HD. When I am in the area of Menards they are my first choice. Much better value than a HD.
NASCAR and Gibs have ruined the great American Racing Sport. Fans now boo the Toy drivers. How kool is that! With jerks like Kyle and Tony who needs to watch it anymore.
Attended my last NASCAR race two years ago.
5-03-2008 @ 2:27PM
textit said...
Not sure where leber gets his info and I would think he would have better, being he is an investment banker. Lowes has been in business twice as long as Home Depot. They are perhaps newer to a broader market but in no way a new player.
5-07-2008 @ 1:45PM
grandma said...
HD & Lowes will never run True Value or Ace Hardware out of business. They have stuff no one else has, and instant help. Though I like Lowes over HD.