Lowe's Management May Have 'Found Religion' On Cost Controls, Says Argus

Chris Graja, a senior retail analyst with Argus Research, discussed Lowe's Companies, Inc. (NYSE: LOW)'s business outlook during a retail related conference call last week.

According to Graja, Lowe's has proven to be a bigger winner compared to its peer Home Depot Inc (NYSE: HD) in picking up Sears Holdings Corp (NASDAQ: SHLD)'s lost share within the appliance department. One of the reasons why Lowe's is beating the larger Home Depot in the category is because "appliances are a slightly below-the-house margin category at Depot, but they're pretty close to the house or above at Lowe's."

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Graja added that Lowe's stores are organized thematically, which helps consumers buy an entire "concept."

The analyst further suggested that historically, Lowe's has not been "as strong" as Home Depot on the cost line. However, he suggested that listening to Lowe's management now discuss cost is as if they "have found religion and seem to be focusing on it." Specifically, Lowe's focus has shifted from opening new stores to improving the efficiency of already opened stores.

With that said, Graja stated there is a "fair amount of room" available for Lowe's to "improve" moving forward.

As a side note, Graja pointed out that Lowe's improving appliance sales also serves as a "sign of the health of the economy," as the company is "finally seeing a return in big ticket" purchases.

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