Lowe’s Companies, Inc. sold its Canadian retail business on Nov. 3. The deal is expected to close in early 2023 and will establish Lowe’s Canada and Rona as a stand-alone, Quebec-headquartered company.Lowe’s Companies, Inc. sold its Canadian retail business on Nov. 3. The deal is expected to close in early 2023 and will establish Lowe’s Canada and Rona as a stand-alone, Quebec-headquartered company.

Handyman particular: Dwelling Depot vs. Lowe’s

By Clarrie FeinsteinEnterprise Reporter

Sat., Nov. 19, 20223 min. learn

Article was up to date Nov. 21, 2022

Lowe’s Canada should forge new path after being offered

The outlook for Lowe’s Canada is unsure after Lowe’s Corporations, Inc. offered its Canadian retail enterprise on Nov. 3. New York-based personal fairness agency Sycamore Companions purchased the Canadian enterprise for $400 million (U.S.). Meaning Lowe’s Canada will grow to be personal and not be a part of Lowe’s Corporations publicly traded shares.

Lowe’s Canadian arm is predicated in Boucherville, Quebec, and operates or companies round 450 company and unbiased affiliate supplier shops below numerous banners, together with Lowe’s, Rona, Réno-Dépôt and Dick’s Lumber.

Lowe’s chairman, president and CEO Marvin R. Ellison mentioned the sale is a crucial step to simplify Lowe’s enterprise mannequin.

The deal, anticipated to shut in early 2023, will set up Lowe’s Canada and Rona as a stand-alone, Quebec-headquartered firm.

Lowe’s purchased Rona Inc. in 2016 in a deal valued at $3.2 billion (CND.). On the time the corporate mentioned the acquisition was a key step in accelerating its progress technique.

“Lowe’s got here into Canada in 2007 and struggled to achieve strong footing,” mentioned Bruce Winder, retail analyst and writer. “Rona and Réno-Dépôt have at all times been the weaker of house enchancment retailers in profitability and gross sales.”

The most important problem for Lowe’s Canada might be merging with Rona, as its troublesome to merge manufacturers efficiently, particularly when its two family names, mentioned Lisa Hutcheson, managing companion at retail consultancy J.C. Williams Group.

“What is going to that merger appear to be? Rona is a legacy Canadian model, so how can Lowe’s leverage that to its benefit? Will they should rebrand? It’s a vulnerability for Lowe’s going ahead,” she mentioned.

Nevertheless, Lowe’s posted sturdy earnings in its third quarter name on Nov. 16. The corporate’s earnings leapt 20 per cent to $3.27 per share, and income grew 2.2 per cent to $23.5 billion, marking its first constructive quarter since January.

The Dwelling Depot posts sturdy earnings as dominance in Canada prevails

Dwelling Depot first got here to Canada in 1994 forging a robust presence within the nation lengthy earlier than Lowe’s arrived, mentioned Winder.

There are 202 Dwelling Depot shops in Canada, the bulk in Ontario. The retailer appeals to the contractor market and sells dependable personal labels the development trade depends on, resembling Husky for instruments, Glacier Bay for kitchen and toilet fixtures and furnishings, Business Electrical for lighting, and Lifeproof for flooring.

“What differentiates Dwelling Depot is having these sturdy personal labels that aren’t as inexpensive or accessible at different shops for renovations,” mentioned Hutcheson.

Dwelling Depot reported a six per cent improve in its third-quarter income reaching almost $38.9 billion, beating analyst expectations. Each its skilled and do-it-yourself gross sales elevated and the corporate posted a revenue of $4.3 billion, or $4.24 per diluted share, up from $4.1 billion, or $3.92 per share, in comparison with the identical quarter final yr.

“We thought within the reopening the pandemic growth that house enchancment shops noticed would cool off, however Dwelling Depot continues to report sturdy gross sales,” Hutcheson mentioned. “As new houses are being inbuilt Canada they’ll have the chance for much more progress.”

The Backside Line

Each corporations will probably see a drop in gross sales in 2023 because the financial system heads right into a recession, mentioned Winder. However sturdy third-quarter earnings from each Dwelling Depot and Lowe’s point out that house enchancment purchases proceed to be profitable.

In Canada, Lowe’s has a extra unsure future because it figures out tips on how to function with out Lowe’s Corporations, giving Dwelling Depot an edge, Winder mentioned.

With recordsdata from Canadian Press.

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