The world's second-largest home-improvement retailer, Lowe's
The company expects revenues to grow 18% to 19% and earnings per share to improve 19% to 20% annually over the next two years. It also reaffirmed its third-quarter earnings guidance and said same-store sales are still in the expected 3% to 5% range.
Lowe's plans to build scads of stores in the coming two years. For fiscal 2002, it will add a total of 123 new units. Fiscal 2003 and 2004 will see 130 and 140 grand openings, respectively. As long as it is able to maintain this growth, it will have 1,137 stores by the end of 2004 -- a 53% increase over its count at the end of fiscal 2001.
Competitor Home Depot
Hopefully, Lowe's can find that perfect balance between growing sales through new units while maintaining same-store sales growth. It already has about $3.7 billion in long-term debt on the books, and it isn't particularly cash-rich. Adding more debt for expansion isn't desirable, but as long as same-store sales can be maintained, using cash from operations for its store growth should be sufficient.
Lowe's does not want to find itself in the same situation that Gap
That possibility is a long time off, though, and Lowe's is executing well. Given its recent success, along with AutoZone's