Dive Brief:
- Lowe's posted a 3% increase in sales for the first quarter of 2018 and expects total sales to increase 5% in fiscal year 2018, but will focus on better inventory management techniques to improve its supply chain and turnover rate.
- The home improvement retailer also plans to open 10 new stores this year, according to a press release, and will test a new delivery service for home delivery.
- According to the earnings call transcript, Lowe's is focusing on more frequent but smaller shipments to better manage inventory and meet consumer demands.
Dive Insight:
Lowe's is one of those retailers not in immediate danger of the retail apocalypse. The retailer's profit margins have remained pretty steady over the past 10 years according to Morning Star data, suggesting that the company has remained abreast of e-commerce disruption.
The latest earnings report is no exception. The company's slow but steady growth and focus on improving its supply chain to better meet consumer demands demonstrates flexibility and adaptability.
Lowe's suffered a small turnover rate drop of 0.2% in Q1, but has a plan to adjust that by focusing on more frequent shipments of smaller loads from distribution centers to stores.
"The first [action plan] is supply chain product flow where we believe we’ve made the inventory investments necessary to have the depth and breadth in key categories like appliances and flooring and tools and hardware to serve both the Pro customer and DIY customer," said Chief Operating Officer Richard Maltsbarger in the earnings call. "Our focus is now shifted to, how do we optimize that flow to improve our service levels and to improve our in-stock percentages."
Maltsbarger also said Lowe's will place greater emphasis on customer engagement so as to more accurately gauge and meet customer needs.
