Here’s Why Lowe’s is Looking for a New CEO

As the housing market shows signs of recovering, the competition between the two largest home improvement retailers in the United States, Lowe’s (NYSE:LOW) and Home Depot (NYSE:HD), has gained momentum.

The Wall Street Journal reported that Lowe’s has begun searching for the company’s next chief executive, one who would better serve the company as it struggles to compete with Home Depot. However, the company does not intend to replace Chief Executive Robert Niblock immediately. Lowe’s directors plan to hire an executive to fill the now-vacant role of chief of merchandising. This person would then become CEO within the next three years.

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Over the past four years, Home Depot has gained market share, while Lowe’s share has decreased. Furthermore, the company’s sales have been outpaced by Home Depot for 12 of the last 13 quarters. But after the company reported a 10 percent drop in second-quarter earnings, Niblock said that the company needed to improve its “level of execution.”

While the company’s is looking to a new leader to stimulate growth, improvements in the housing market could be another means to increase sales.

Bloomberg has reported that Lowes and Home Depot are “attracting investments amid signs the recovery in the housing market is gaining momentum.”  The Standard & Poor’s 500 Home Improvement Retail Index, of which both companies are a part, has risen 13 percent since August 20, compared with the S&P 500’s 2.8 percent gain.  According to Harvard University’s Joint Center for Housing Studies, this means that home improvements will likely increase as well.

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