Lowe’s Steps Up Its Canada Operations With RONA Acquisition

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LOW: Lowe's logo
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Lowe's

Lowe’s (NYSE:LOW) has completed the acquisition of the Canadian home improvement retailer RONA, which will give the company more presence in Canada, and narrow its sales-gap with Home Depot in the country to less than a billion dollars.

LOW Q&A 8

The acquisition, valued at $2.4 billion, will not only add approximately $3 billion to Lowe’s top line, but it is expected to give the combined company an established platform to further boost sales in the Canadian home improvement space. In particular, Lowe’s big-box outlets will now have the company of RONA stores under different banners and in different sizes. Having both larger and smaller outlets gives Lowe’s an advantage as some customers are seen preferring the latter.  In comparison, Home Depot has superstores in Canada. This reflects Lowe’s strategy of becoming a more customer-centric business. Lowe’s has been focusing on making itself more customer-centric for the non-expert — a potentially weak spot for Home Depot. This could help Lowe’s gain more Do-It-Yourself customers and help it differentiate itself from Home Depot.

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In addition to the inorganic growth from the direct addition of RONA to Lowe’s, the combined company is expected to benefit from more brand awareness in the country, helping it grab more market share in the nearly $35 billion Canadian home improvement market going forward.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Lowe’s

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