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Lowe's (LOW) Gains on Solid Demand Conditions, Online Sales

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Focus on home refurbishing and remodeling activities, driven by increased stay-at-home practices amid the pandemic, have been aiding Lowe’s Companies, Inc. (LOW - Free Report) . Notably, sturdy demand trends across most merchandising categories and strong online services are supporting Lowe’s performance. This Zacks Rank #2 (Buy) company’s shares have gained 11.7% in the past three months compared with the industry’s rise of 7.1%. Let’s take a closer look at the aspects acting as aces in Lowe’s stack.

Home Improvements Market Looks Strong

With majority of time being spent indoors, there is more focus on making homes an enjoyable and comfortable space. Consumers have been investing in making homes well equipped for work-from-home, remote schooling and entertainment needs. During first-quarter fiscal 2021, Lowe’s U.S. home-improvement business witnessed comparable sales (comps) growth of 24.4%. This was fueled by broad-based growth across all merchandising departments. In fact, all 15 merchandising departments in the United States delivered positive comps, exceeding 18%. Growth in lumber was quite impressive, backed by robust demand from Pro customers. Apart from lumber, the company also witnessed growth in areas such as electrical, decor, kitchens, and bath as well as seasonal and outdoor living.

Lowe's is also gaining traction with the newly-introduced Total Home strategy that includes providing complete solutions for various types of home repair and improvements needs. The total home strategy is expected to boost market share by accelerating investments in pro-related offerings, installation services, localization as well as boosting product assortments.

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Solid Online Sales is an Upside

Lowe’s online platform has been acting as a feather on its cap. Online sales have been gathering pace due to consumers’ growing inclination toward digital shopping and the company’s efficient omni-channel offerings. Markedly, sales in Lowes.com increased 36.5% in fiscal first quarter.

We note that Lowe’s has been investing toward enhancing its omni-channel retailing capabilities to resonate well with customers’ demand. In this context, the company completed the installation of Buy Online Pickup in Store touchless lockers across stores. The company is also focused on enhancing customers’ online shopping experience by improving features like search and checkout. Going ahead, management believes that its online business model has tremendous potential to grow, backed by an efficient technology team and superior cloud-based platform.

Wrapping Up

Solid execution of growth strategies along with compelling product offering of well-known brands and high-value private labels has been helping the company efficiently meet elevated demand. Lowe's believes that the home improvement market has robust growth potency, with consumers becoming increasingly motivated to invest in homes. In fact, it remains bullish on the home-improvement industry in general.

3 Picks You Can’t Miss Out On

Lumber Liquidators Holdings, Inc. (LL - Free Report) , flaunting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 22.5%. You can see the complete list of today’s Zacks #1 Rank  stocks here.
 
The Home Depot, Inc. (HD - Free Report) , holding a Zacks Rank #2, has a long-term earnings growth rate of 11.4%.

Tecnoglass Inc. (TGLS - Free Report) , carrying a Zacks Rank #2, has a long-term earnings growth rate of 20%.

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