Lowe’s is trying to build a stronger online relationship with its Pros.
Lowe’s Companies Inc. processed about $528 million in e-commerce sales, up 26% from approximately $419 million this time last year, said Ricky Damron, chief operating officer during a Q4 conference call with analysts Wednesday, according to a transcript of the call from Seeking Alpha. During its 2015 fiscal year, about $1.77 billion in sales was processed online, up 25.9% from $1.41 billion in 2014.
Lowe’s says 30% of total sales are to its Pro customers, the company’s term for contractors and other business customers. The home improvement retailer doesn’t break out how many of its Pro sales are processed online at LowesForPros.com, its business-to-business e-commerce site. But the B2B E-Commerce 300 estimates Lowe’s 2015 B2B e-commerce sales at $350 million. Sales to Pro customers outpaced sales to consumers in the United States during Q4, CEO Robert Niblock said.
This growth in B2B sales is reflected by the “above average” growth in such Pro-heavy product categories as lawn and garden, lumber and building materials, paint and products in the category known as maintenance, repair and operations, or MRO. “We saw particular strength in outdoor project categories led by lumber and building materials, lawn and garden, and to a lesser extent, outdoor power equipment and millwork as customers took advantage of mild weather to complete exterior projects,” Michael Jones, chief customer officer, told analysts.
Company executives say they’re taking several steps to build sales to Pro customers, including expanding product lines and communication with Pro customers—both prospects and existing customers—through multiple marketing campaigns and special events both online and in stores.
In the first half of 2016, Lowe’s plans to hire an additional 35 account executives to work with business customers that order and replenish products across multiple retail or construction locations. These representatives have been effective in growing Lowe’s business with Pro customers, especially with large MRO and national business customers, Jones said.
“We’re also reconnecting with Pros who have not recently purchased from Lowe’s to show them what’s changed in our stores and online, using target marketing and Pro-focused events to drive awareness and generate new business,” Jones said, adding: “We extended the interaction to our stores for a first-time Builder Week in Q4 with special product and credit offers for the Pro. Our focus on strengthening our portfolio of brands, serving Pro customers through our Pro services team as well as our re-launch of LowesForPros.com [in Q2], are part of a broader commitment to building our strong foundation with the Pro.”
The company also announced that it plans to exit the Australian market, where it jointly operates Masters Home Improvement stores and Home Timber and Hardware Group’s retail stores and wholesale distribution in Australia. “We made the decision to focus our resources on areas of the business where we see greater potential return on investment,” Niblock said.
One high-growth area has been Canada, where Lowe’s generated double-digit comp sales in Q4.
In February 2016, Lowe’s acquired Canadian home improvement retailer Rona Inc. for approximately $2.3 billion. As part of its increased focus on Canada, Lowe’s plans to open an additional 12 stores in Canada in 2016.
Lowe’s plans to open 45 new home improvement and hardware stores worldwide in 2016. As of Jan. 29, 2016, Lowe’s operated 1,857 home improvement and hardware stores in the U.S., Mexico and Canada.
For the year, Lowe’s recorded 197.1 million total transactions. In the quarter, comp ticket size increased 1.5%.
For the fourth quarter ended Jan. 29, 2016, Lowe’s reported:
- Net sales of $13.2 billion, up 5.6% from $12.5 billion during the same time last year;
- Companywide comparable-store sales up 5.2%;
- U.S. comparable-store sales up 5.5%;
- Gross profit of $4.59 billion, up 5.5% from $4.35 billion;
- Net income of $11 million, down 97.5% from $450 million. The company says the cost of exiting the Australian market was the main contributor to the fall in net income.
For the 2015 fiscal year ended Jan. 29, 2016, Lowe’s reported:
- Net sales of $59.01 billion, up 5.0% from $56.22 billion during the same time last year;
- Gross profit of $20.57 billion, up 4.9% from $19.56 billion;
- Net income of $2.55 billion, down 5.6% from $2.70 billion;
- Companywide comparable-store sales up 4.8%;
- U.S. comparable-store sales up 5.1%.
Sign up for a free subscription to B2BecNews, a twice-weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web— Media LLC, which also publishes the monthly business magazine Internet Retailer. Follow Nona Tepper, associate editor for B2B e-commerce, on Twitter @ntepper90.
Follow us on LinkedIn and be the first to know when new B2BecNews content is published.Favorite