Lowe's new Australian competitor could prove tougher than Home Depot
On August 17, 2009, Robert Niblock said Lowe's is scaling back it's expansion.
"Consumers are only taking on home improvement projects that they feel are absolutely necessary and are postponing discretionary projects until clarity about the future returns," Niblock said in a conference call. The company said it is scaling back expansion plans in 2010. The company now expects to open 35 to 45 stores during the year. It said it is also taking a $48 million charge for canceling plans for opening about 80 new stores that had been in the pipeline over the next few years.
Eight days later.....
On August 25th, 2009, Robert Niblock announces 150 store expansion in Australia.
Lowe’s Cos. Inc. is forming a joint venture with Woolworthworts Ltd. to develop a network of home-improvement stores in Australia. Mooresville-based Lowe’s (NYSE:LOW) would have a one-third stake in the chain, which would grow to more than 150 stores within five years.
The first store is to open in late 2011, the companies say. “This is a tremendous opportunity to enter the ($20 billion) and growing home-improvement market in Australia, at a time when the sector is underserved,” says Robert Niblock, Lowe’s chairman and chief executive.
Why the Flip Flop from Robert Niblock? What is Lowe's current strategic direction? Your guess is as good as anyones. Even Jim Cramer took a moment to slam Lowe's. -CLICK HERE-
Lowe's CEO, Robert Niblock claims Australia is "underserved". He claims many other things as well. Like the housing market has bottomed, unemployment will recede at the beginning of 2010, etc. He is the ultimate optimist in these dire economic times. Some say he may also be delusional as well. Perhaps too many Celebrity Gala Events, free corporate jet rides and the expensive Lobster dinners have clouded his perception of reality.
Lowe's stores are severely understaffed. The computer system needs immediate upgrading according to employees. Morale within the company is at an all time low. Now Robert Niblock sets his sights on a new frontier, a world away in Australia.
So what will Lowe's face when it opens "150 stores over the next five years" in that foreign country?
We took a look and here is what we found. It's very hard to develop store sites in Australia for many reasons, mostly governmental red tape. So 150 stores in five years may be a bit unrealistic. And by the way, whatever happened to the Lowe's store expansion in Mexico?
In Australia, Lowe's will face Bunnings Warehouse. This big box retailer could prove to be a more formidable competitor in their native country than Home Depot is in North America. Lowe's is struggling right now in the United States. Stretching their resources (and cash) this way could eventually prove to be fatal.
Allow me to do the introductions.
Lowe's meet Bunnings....
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