Lowe's Companies Inc
) announced that it has completed the acquisition of the majority
assets of Orchard Supply Hardware Stores Corporation for $205
million in cash.
Orchard's acquisition is a crucial move on Lowe's part as
increasing square-footage in the key California market brings
significant opportunities for the company to improve its top line
Orchard's smaller-format stores located at prime locations of
the region are likely to bolster the company's market positioning
and will facilitate Lowe's to capitalize on the under-penetrated
Lowe's operates through 110 stores in California. However, its
presence is significantly lower than its competitor,
The Home Depot, Inc
) and arguably one of the reasons why it has been lagging in
terms of performance. Orchard, which was spun off by
Sears Holdings Corporation
) in 2012, has 91 neighborhood hardware and garden stores of
which Lowe's would acquire 72 stores.
Going forward, this Zacks Rank #2 (Buy) company stated that it
will retain the Orchard brand and the current management team.
Alongside, Orchard will operate as an individual unit.
Being the world's second largest home improvement retailer,
Lowe's remains well positioned to benefit from the housing market
recovery. The company is closing underperforming stores and its
strategy of enhancing customer-shopping experience and
merchandising transformation is likely to help it generate
incremental sales. Moreover, the company's sustained focus on
price management and adding extra labor hours will help it boost
its market share.
Besides Lowe's, the other stock worth considering in the
housing and allied sectors includes
Lumber Liquidators Holdings, Inc
), which holds a Zacks Rank #1 (Strong Buy).
HOME DEPOT (HD): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
LOWES COS (LOW): Free Stock Analysis Report
SEARS HLDG CP (SHLD): Free Stock Analysis
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