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TORONTO ? Lowe’s Cos. is in a powerful position in Canada even before the house improvement giant closes its pending $3.2 billion acquisition of Rona Inc.
The North Carolina-based retailer, which announced a friendly takeover from the Quebec-based hardware chain earlier this month, posted its third consecutive year of double-digit Canadian same-store sales growth on Wednesday.
For the fourth quarter ended Jan. 29, Lowe’s said its sales at stores open for over a year in Canada grew 13.8 per cent compared with exactly the same period last year, up from 7.5 percent same-store sales development in the 3rd quarter.
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Same-store sales at Lowe’s Canada – which opened in 2007 but has struggled to scale in the business in the face of rival Home Depot – were up 10.1 percent in November, up 13 per cent in December and rose a strong 20.3 percent in January. Lowe’s Canada currently has 42 stores in Canada and can open 12 more big-box stores this season, primarily in former Target locations.
Lowe’s U.S. same-store sales grew 5.1 per cent on 2015, and total company revenue was US$59.1 billion, the organization said Tuesday.
“The timing from the merger is propitious, as both companies have significantly strengthened their businesses during the last 3 years,” Keith Howlett, retailing analyst at Desjardins Securities, said inside a note to clients on Wednesday.
“Lowe’s Canada is approaching breakeven and Rona has improved (its operating earnings) to $262 million, or 6.2 percent of revenue.” He estimates 2015 operating earnings of $900 million to $1 billion at Home Depot Canada on revenue of roughly $7 billion.
Howlett expects Lowe’s will complete the acquisition of Rona within the second quarter of the year.
hshaw@nationalpost.com
Twitter.com/HollieKShaw
