Lowe’s: Spending on Customer Experience in Weak Housing Market Compresses Profit Expansion

Lowe’s laid out its updated near- and long-term strategies at its Dec. 11 investor day. We contend that the updated total home strategy, with a continued focus on improvements in pro penetration (now at 30%), loyalty, and productivity will improve the customer experience and ROICs, supporting the firm’s wide-moat rating. However, we don’t think such enhancements in customer experience and operating processes are unique to Lowe’s. Other retailers in the industry continue to pursue similar efforts, which will result in Lowe's perpetually spending to maintain its competitive advantages.