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 2 of 2)
5-04-2008 @ 10:39PM
Jared said...
As an ex-employee of HD and a current employee of HD, I must say it comes down to the management in each store.
The first HD i worked at was GREAT!! We kicked major ass and destroyed the Lowes in every aspect. (Harrisburg, PA)
The second HD I worked at SUCKED. The management didn't care about the employees as all. Our store made budget and the store was to split a $30,000 bonus check. I got $89. Multiply that by 120 employees and the managers split the remaining $20,000. The people out on the floor doing ALL the work got didly squat. I could go on for hours about this store. (Broomall, Deleware County, PA)
The Lowes I work at now I have some complaints about but is leaps and bounds in front of Home Depot's standards. Lowes employees get Holiday bonuses, employee discounts, and commissions from special orders. Tons more incentives from Lowes. The only thing Lowes lacks is a good tuition reimbusement. Lowes is 1,000 a year where as Home Depot's was $1,500 a semester.
(Warrington, Bucks County, PA)
5-05-2008 @ 7:57AM
Les said...
I work at THD now and love my job. The upside are some really great customers who come in without a clue and leave not only with the product they need but will come back to me again for something new. The downside are rude customers who treat associates like dirt, steal anything they can get their hands on and whistle, hiss and interrupt ongoing conversations. Is my store a bit dirty? Sure, it's a warehouse with open doors, customers tracking in mud and rain and pallets coming in day and night. We sweep every day. But I give great customer service, my department is almost totally in stock and my people will help you anywhere in the store. I've been ignored at the local Lowe's by 5 employees. I walked out without buying anything there. If you don't get good service at my store, ask for the manager and watch what positive service you get.
5-05-2008 @ 12:42PM
james ivester said...
WHAT HAPPENED TO MY COMMENTS
5-08-2008 @ 7:56PM
7 years at the HD said...
I've worked for the Home Depot for just over seven years. I've seen the company change for the worse, but recently I've seen some improvements.
I put myself through college working there which was great because part-timers got medical and dental benefits. After graduation I was offered a full time postion. After my annual review I made a complaint about my raise. The store manager indicated I would never make more money and that I should find another job. So I did, but keep the job at The Home Depot because of my 401k.
Everyone used to be paid very well at the HD as far as retail goes, but as soon as they hired Bob Nardeli that stopped. And the 20 cent annual raises started. Cashiers bagan receiving minimum wages, who else can afford that than 18 year olds who live at home with mom? So that’s what they started hiring. For many this was their first time with a real job. No previous construction or retail experience.
5-08-2008 @ 8:09PM
Dab said...
Hate their service, hate their employee attitude. They have never stood behind anything I ever bought there. I now drive an extra 20 miles to avoid Home Depot to get to Lowes
5-08-2008 @ 9:04PM
Juan F. said...
Money wise HD beats Lowe"s big time.
HD Lowe's
sales $ 77.3 bil. $48.3 bil
income 4.2 bil. 2.8 bil
yield 3.15 % 1.28%
5-09-2008 @ 2:41AM
Jack said...
Hi! Home Depot started out as a very friendly customer satisfaction store. They had experienced people from many different trades working in their departments. They had 8 or 10 cash registers open when it need be. They normally have one register open with all of the self service registers open. They were almost always busy with lots of people in their stores. When I go there now and I need advise, they have to page the one person that is working in that department. When I call on the phone, I have to wait for that one person to get time to answer the phone. Home Depot should hire more people to help the customers so it's not a hassel to shop there. Thanks! Jack
5-09-2008 @ 8:51AM
Mike said...
Near us, Home Depot has 2 stores: aisles are often closed during the day for restocking, employees often can't help you and stores generally are dirty. They seem to go after small construction companies.
Lowe's store is super clean, wide aisles and employees even come up and ask if they can help!
No comparison.
5-09-2008 @ 10:39AM
Mike said...
Lowe's has Home Depot beat by a long shot!
5-09-2008 @ 10:45AM
Richard said...
I worked for Lowe's for nearly ten years. The company has been on a steady decline since 2002.
I am so disgusted with Lowe's, I never shop there. The local Lowe's in Elizabeth City, NC has to be one of the worst stores I have ever seen. There is no help inside the stores because they stand outside and smoke in front of the contractor entrance. What help is left in the store never seems to know anything. The Kitty Hawk Home Depot is no better. I called to ask about a product they stock and the associate did not even know what she was doing. They do have a great man in the garden center who was very helpful.
5-09-2008 @ 10:55AM
richard said...
Lowe's quality of customer service has suffered in the last several years. Part of the problem has been with Robert Niblock who is quickly destroying the company. We have seen the biggest drop in stock price under Niblock.
5-09-2008 @ 4:26PM
john said...
I work at HD for over 2 yrs. now, and the promises made after Nardelli left have yet to appear, I feel like a stock boy, sorry I have 18 yrs alone in the plumbing/HVAC area, and was displaced for an "expert" who does what I did, due to job description that had little bearing on experience, I didnt apply, turns out I may have gotten the position. Now I do related work, but I havent forgotten how I was treated. I will say, at our store the associates are generally friendly and knowledgeable despite constant pressures from management to outdo ourselves, with less staffing I may add. And dont even get me started on selling credit. Whats important, customer service or meeting some credit goal? And yeah, I shop at Lowes because its less cluttered. Voice of the customer surveys mention it constantly, we still have aisles cluttered with displays. Nothing changes.
5-09-2008 @ 4:33PM
Mike said...
Home Depot stores are dirty, aisles often closed for restocking, and enmployees often can't or don't know how to help customers.
Lowe's stores are clean, wide aisles and employees will walk up and ask to help you.
In drive right by a Home Depot to go to Lowe's...
5-10-2008 @ 3:10PM
etq2000 said...
Every Home Depot I visit is the same, the inventory is trashed, boxes are opened and then taped shut, the stores are a mess. Lowe's stores on the other hand are neat and clean. The Associates are of a higher calibre also. Lowe's wins hands up.
5-21-2008 @ 11:12PM
min said...
How long has Lowe's and/or Home Depot been in business? We're considering getting replacement windows (a total of 23) and want to get a quote from both companies. We got a quote from Sears and going with them would cost us $20,000 (about $800 a window), $27,000 if we order after 30 days from the quote. Seems a bit steep but they have been in business for a 100 years and stand behind their products. Do you think Lowe's or Home Depot could offer a better price along with a good reputation of standing behind their products and installation? The Pella windows I think are siginificantly less costly and have a lifetime warranty as well as transfer of ownership.
5-25-2008 @ 10:40PM
Eric Porter said...
I think the author of this article needs to look back at their history. I am a PROUD hd associate and hd is the new kid on the block not lowe's. I respect every bit of lowe's and agree that hd store morale is low. But from the inside, i KNOW hd is taking the right steps to reform. We are half the age of lowe's and have made plenty of rookie mistakes. And yes, we are a WAREHOUSE store. If you want to shop at saks 5th avenue, hd is not the place to go. But please give it time guys, we and Frank Blake are truly trying to make up for ours and Bob N's rookie mistakes.
6-11-2008 @ 12:23PM
edward gazzier said...
i shop lowes with my customers,my customers are settled higher class older people and the rock music play seems one cant decide if you are in a nightclub or hardware, ac-dc and leanord skynard blaring crap at 8;00 in the morning when you take a 70 year old lady for a faucet and a 300.00 faucet is just enought to send one to lowes, also on tuesday morning is like its a fire in the store and the ONLY time anyone moves, thats when the clearance prices come down from home office,most of the time the cashiers cant move in their cash register area because of all the clearance items being held there which is aginst rules but in our h.d store in mobile no one fears the manager at all