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Home Depot, Lowe’s Report Strong Growth To Professional Customers

 

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(FILES)A Home Depot store is seen in this March 28, 2013 photo in Silver Spring, Maryland. Home improvement retailer Home Depot boosted its forecast for the year on August 20, 2013, crediting the recovery in the housing sector for a 17.2 percent jump in quarterly profits. Net earnings for the second quarter ended August 4 came in at $1.8 billion on revenues of $22.5 billion, up from $1.5 billion on revenues of $20.6 billion a year ago. The results translated into per-share profits of $1.24, three cents above analyst forecasts. AFP PHOTO/Jewel SamadJEWEL SAMAD/AFP/Getty Images

Home Depot and Lowe’s — the two largest home improvement centers in the country — say they have increased sales to professional customers by double digits and are targeting them by offering better credit terms, flexible deliveries and on-line transactions. The growth seems to indicate both companies will continue to seek professional (pro) customers and MRO buyers, a direct shot at construction and industrial distributors.

Distributors should note the steps that these two giant companies are taking to capture a higher share of the pro construction market. Both are adding products to their pro business lines as well offering a number of new services, making it easier for their pro customers to order and receive supplies.

“We continue to strengthen our pro business, driving comps well above the company average, by further advancing our products and services offering to better serve the pro customer,” said Lowe’s COO Ricky Damron during the company’s Q1 earnings conference call.

Lowe’s has been developing an omni-channel approach to serve its pro customers. One of those strategies is using Account Executive Pro Services (AEPs). AEPs work with larger regional customers to have them order and replace products across multiple geographies and locations.

“Our AEPs are a key component of our strategy to grow our business with larger pro customers,” Damron said during the earnings call.

Lowe’s has more than 180 Pro outside representatives in the field and says it has experienced great success with the program as grows sales in AEP comp sales. The company expects to add more AEPs to create additional opportunities to reach pro customers.

Damron also says that Lowe’s is using a targeted marketing approach aimed at the professional customer and conducting special buying events for them to drive awareness and generate new business.

“We have been pleased with these results in driving both incremental purchases with existing pro customers and increasing relationships with new customers,” Damron said.

Meanwhile, Home Depot has taken several steps to grow its pro business and sales to that segment are reported to be outpacing the company’s average.

The company is offering pros private label cards that have extended terms, special return policies and other steps that are leading to a substantial number of new accounts, higher than what HD had originally anticipated.

Home Depot also recently designed and tested a pilot plan to deliver products faster and more efficiently to pro customers. The company says that it was encouraged with initial sales and it has since expanded into additional markets such as Atlanta, GA.

“We saw a pretty substantial increase in the customer option to choose delivery and we’re seeing double-digit growth,” said Craig Menear, chairman, CEO and president of Home Depot in a call with analysts following release of the company’s Q1 earnings.

The company offers flexible delivery to contractors seven days a week and next day delivery on in-stock items. It also offers contractors the ability to order on line and pick up orders in two hours, as well as beneficial credit terms and fuel discounts.

Menear also said Home Depot expects to see more growth in MRO sales due to its acquisition of Interline Brands, one of the largest industrial distributors in the country.

“The Interline integration is progressing nicely,” he told financial analysts. “We continue to move forward on a number of exciting sales driven initiatives, and we have outlined a path to truly realize the value of the Interline acquisition and the total pro opportunity over the next 18-to-24 months.”

Home Depot acquired Interline Brands last July for $1.63 billion. The acquisition was designed to help HD sell more supplies to customers in the building and maintenance profession. The company is pleased with the collaboration within its sales organization as they jointly attack end user professional markets.

Home Depot says it currently has a small percentage of sales in building and maintenance and Menear said “we think there’s lots of opportunity to grow.”

After releasing its quarterly results, Home Depot raised its fiscal 2016 sales guidance and now expects sales will be up approximately 6.3 percent and comp sales will be up approximately 4.9 percent.

Lowes’ RONA Acquisition Approved

In addition, Lowe’s is expanding its reach and has has received regulatory approval for its huge $2.3 billion purchase of RONA, its large competitor in Canada.

In Mid-May, Lowe’s received approval from Canadian regulatory authorities for its $2.3 billion acquisition of large competitor RONA, a leader in Canada’s home improvement and renovation retail market. The transaction was approved by RONA’s shareholders in March, but was subject to approval by regulators in the U.S. and Canada.

RONA, with its headquarters in Boucherville, Quebec, has approximately 500 corporate and independent affiliate dealer stores and nine hardware and construction material distribution centers. The company has more than 17,000 employees in corporate stores and over 5,000 employees in the stores of its independent affiliate dealers.

Lowe’s has 42 stores in Canada and virtually no presence in Quebec, a province that accounts for about 23 percent of the country’s population. RONA has a dominating presence as the home improvement market retailer.in Quebec.

Lowe’s had attempted to buy RONA four years ago, but the deal failed to go through, largely because of political backlash in Quebec.

 

*Originally posted on IndDist.com*

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Spring Cleaning Preventative Maintenance

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Spring cleaning isn’t just for our homes—if you own or operate a commercial kitchen, now is a perfect time to perform some easy preventative maintenance tasks to make sure your kitchen equipment is cooking and cooling efficiently. Read on for some common areas in need of preventative maintenance.
Thermostats

When thermostats display the wrong temperature, heating and cooling food becomes inefficient and can lead to food safety and quality issues. Throughout the year, check your thermostats and other control systems to ensure ovens, refrigerators, and freezers are operating at the correct temperature. Check your equipment operational manual for instructions on how to calibrate thermostats.

Gaskets

Gaskets help ovens keep hot air inside of them and refrigerators and freezers keep colder air inside, but gaskets can and do wear out over time. Periodically check the condition of the gaskets in your kitchen. If there are rips or tears in them, replace them right away. To see if their seal is still tight, close the door on a dollar bill—if you can pull the bill out with no resistance, it’s time to buy a new gasket.

Burners & Pilot Lights

Keep your range and oven cleaned throughout the year so grease and food spills don’t build up and cause significant damage over time. If you have a gas range, check its burners periodically—do the flames light up evenly together? If not, the burner ports may be clogged. Check your operational manual for instructions on how to clean these ports. Also check your gas oven’s pilot light. If the pilot light doesn’t stay lit, it might be clogged as well, so again, check the operational manual for instructions specific to your model. Whenever you’re dealing with gas, be sure to turn it off at the shut-off valve before making any repairs.

Condenser Coils

Typically found underneath your refrigerator, condenser coils cool down the refrigerant in the refrigeration cycle. Coils covered in dust and grime can lead to inefficient performance and a shorter equipment lifetime though. At least four times a year, simply vacuum off this dust buildup on your coils to restore your refrigeration unit back to its most optimal efficiency.

Water

Calcium buildup in equipment from hard water can lead to poor water pressure and low-quality water. Descale your steamers, boilers, ice machines, and combi ovens with descaling chemicals approved by your equipment’s manufacturer at least twice a year.

Originally posted on 3Wire.com

 

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U.S. Industrial, Manufacturing Output Rebound In April

Industrial production increased 0.7 percent in April after decreasing in the previous two months. Manufacturing output rose 0.3 percent after declining the same amount in March. The index for utilities jumped 5.8 percent in April, as the demand for electricity and natural gas returned to a more normal level after being suppressed by warmer-than-usual weather in March. Mining production fell 2.3 percent in April, and it has decreased more than 1 1/2 percent per month, on average, over the past eight months. At 104.1 percent of its 2012 average, total industrial production in April was 1.1 percent below its year-earlier level. Capacity utilization for the industrial sector increased 0.5 percentage point in April to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.

Market Groups

The indexes for all major market groups either increased or were unchanged in April. The rise in the output of utilities contributed significantly to gains in the indexes for consumer goods, business supplies, and materials through their energy components. Among consumer goods, the output of durables rose 1.3 percent, and the production of non-energy nondurables moved up 0.3 percent. The increase for non-energy nondurables reflected gains for foods and tobacco and for chemical products that were partly offset by decreases for clothing and paper. The production of business equipment advanced 0.8 percent, mostly because of a sizable increase for industrial and other equipment. The indexes for defense and space equipment, construction supplies, and non-energy business supplies were little changed. The output of non-energy materials moved up 0.1 percent as a result of an increase in its durable component; the production of nondurable materials edged down.

Industry Groups

Manufacturing output increased 0.3 percent in April. The production of durables rose 0.6 percent; the largest gains were recorded by machinery and by motor vehicles and parts, with increases of about 2 1/2 percent and 1 1/4 percent, respectively. Only a few durable goods industries posted declines, with the largest, about 1 1/4 percent, for primary metals. The output of nondurable manufacturing was unchanged in April, as gains in the indexes for food, beverage, and tobacco products and for plastics and rubber products offset declines for nearly all of the other industries. The output of other manufacturing (publishing and logging) declined 0.4 percent.

The drop of 2.3 percent for mining in April reflected substantial cutbacks in oil and natural gas extraction as well as reductions in coal mining and in oil and gas well drilling and servicing. The index for coal mining has fallen nearly 40 percent over the past 12 months. The increase of 5.8 percent in the output of utilities was its largest since February 2007, when it leapt 6.2 percent. In April, electric utilities and natural gas utilities expanded 5.4 percent and 9.3 percent, respectively.

Capacity utilization for manufacturing increased 0.2 percentage point in April to 75.3 percent, a rate that is 3.2 percentage points below its long-run average. The operating rate for durables increased 0.4 percentage point, while the rates for nondurables and other manufacturing (publishing and logging) edged down. The operating rate for mining dropped to 72.5 percent, the lowest rate over the history of this series, while capacity utilization for utilities jumped 4.2 percentage points to 78.6 percent.

 

Original article posted at IndDist.com.

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March U.S. Non-Res Construction Up 1.6% From 2015

Non-residential construction starts increased 18 percent from February to March in the U.S., according to a new report (see below) from construction data provider CMD. March’s new construction total, $28.5 billion, was 1.6 percent higher than March 2015.

Year-to-date starts have increased 9.8 percent compared to January-to-March in 2015. In addition, year-over-year employment in construction in March increased 4.7 percent, two-and-a-half times as fast for all jobs in the economy.

Among the major type-of-structure categories, commercial and heavy engineering increased 11.3 and 20.7 percent respectively, and institutional starts increased by 27.2 percent. Comparing March 2016 to March 2015, institutional starts have seen the biggest increase, by 37 percent.

imageAdditionally, the jobless rate in construction in March was 8.7 percent, decreasing from 9.5 percent in March of 2015.