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Lowe's Aims Growth

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Acquisitions, operating efficiencies and technological advancements, all remains on the cards for Lowe’s Companies Inc. (LOW - Free Report) , which is trying all possible means to bring the company on the growth trajectory and generate higher sales, Reuters reported.

The future of home improvement companies are correlated to the health of the economy. Thus, it comes as no surprise that the companies operating in this sector are striving hard to add diverse revenue streams to hedge against economic cycles.

Lowe’s, the world’s second largest home improvement retailer, boasts of a proven strategy for investing in stores in order to enhance customers’ shopping experience. The company’s sustained focus on Everyday Low Prices, New Lower Price, Go Local and Specialty Sales initiatives have helped it to grow its market share.

Lowe’s old tag line: “Let’s Build Something Together” was replaced with “Never Stop Improving,” reflecting its new brand strategy and endeavors towards improving and developing innovative ideas. The company also launched an online tool, “MyLowes”, to aid consumers so they can better manage their homes and other remodeling projects. We believe that these initiatives would help the company in gaining a competitive advantage.

The company also recently acquired an online home improvement and lifestyle products retailer, ATG Stores, to expand its presence in the online retailing platform. ATG carries 3.5 million products from over 3,300 manufacturers. ATG Stores’ robust online retailing platform will help Lowe's target new audience and provide better customer service, while doubling the number of items on in 2012.

Lowe’s is actively managing its capital. The company is rationalizing its capital expenditures, including store-remerchandising efforts, to improve its return on investment. As a result, the company expects to generate substantial future cash flows. The company’s strong liquidity will position it to drive future growth. The company’s long-term goal is to improve profitability and attain 10% operating margin by 2015.

In the home improvement retailing business, Lowe’s faces stiff competition from The Home Depot Inc. (HD - Free Report) , Sherwin-Williams Company and other home supply retailers on attributes such as location, price and quality of merchandise, in-stock consistency, merchandise assortments, and customer service. This may weigh upon the company’s results.

Currently, Lowe’s has a Zacks #2 Rank, implying a short-term ‘Buy’ rating. Besides, we retain our long-term ‘Neutral’ recommendation on the stock.

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