TORONTO ? Lowe’s Cos. is in a powerful position in Canada even before the house improvement giant closes its pending $3.2 billion purchase of Rona Inc.
The North Carolina-based retailer, which announced an amiable 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 more than a year in Canada grew 13.8 per cent in contrast to exactly the same period a year ago, up from 7.5 per cent same-store sales growth in the third quarter.
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Same-store sales at Lowe’s Canada – which opened in 2007 but has struggled to scale up the business in the face of rival Home Depot – were up 10.1 per cent in November, up 13 percent in December and rose a strong 20.3 percent in January. Lowe’s Canada currently has 42 stores in Canada and will 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 three 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 per cent 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 in the second quarter of the year.
hshaw@nationalpost.com
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