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Home Depot vs Lowe's

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Rutgers University

on 26 August 2014

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Transcript of Home Depot vs Lowe's

HOME DEPOT OVERVIEW
cooling down...
.
Home Depot vs Lowe's
The Home Depot
Lowe's
Profitability
Industry Overview
CLEAR SKIES AHEAD
LOWES OVERVIEW
Home Depot
Lowe's
Conclusion
Annual Report Analysis
vs
Key
Statistics
Key
External
Drivers
Private Spending on
Home Improvements
Market
Share
Per Capita
Disposable Income
Revenue
vs
Employment
Key Takeaway
Private spending on home improvements is expected to trend upward in the
Key Takeaway
Per capita disposable income is expected to increase over the next few years
Declining home ownership rates
hurt demand for industry products during the recession
Products & Services
Segmentation
Accounting
Analysis
Source IBISWorld, US Home Improvement Stores
Home Depot Overview
Alejandro Torres
Michael Pelardis
Swamy Vasudevan
Marica Smith
Group 7
Jeffrey Hermann
Kathleen Munster
Prathibha Rao
Serwaa Amankwaa
Customer
Segmentation
Products &
Services
Top Product
Categories
Seasonal
Fluctuations
Evaluation of
Annual Reports
Liabilities
Stockholder's
Equity
Write-Offs
Notes to
Financial
Statements
Signoffs
Assets
Accounting
Analysis
Revenue
Recognition
Deferred
Revenue
Accounts
Receivable
Depreciation &
Amortization
Cost of Sales
Merchandise
Inventory
Business Strategy
Cutting Costs
Right Pricing
Supply Chain
Customer
Service
Technology
New
Products
Marketing
Closing Bad
Ventures
Industry Overview
Home Depot Analysis
Lowe's Analysis
Comparison of Key
Financial Data
Conclusion
Group 7
Serwaa Amankwaa
Kathleen Munster
Prathibha Rao
Alejandro Torres






Jeffrey Hermann
Michael Pelardis
Marica Smith
Swamy Vasudevan


Revenue
vs
Employment
As unemployment falls
disposable income rises and demand for industry products increases
`
Lowe's Overview
Customer
Segmentation
Products &
Services
Top Product
Categories
Seasonal
Fluctuations
Evaluation of
Annual Reports
Assets
Write-Offs
Liabilities
Stockholder's
Equity
Notes to
Financial
Statements
Signoffs
Accounting
Analysis
Revenue
Recognition
Deferred
Revenue
Accounts
Receivable
Depreciation &
Amortization
Cost of Sales
Merchandise
Inventory
Comparison of Key Financial Data
Liquidity

Liquidity Ratios
Solvency
Solvency
Ratios
Profitability
Ratios
Profitability
Ratios
Comparison of Key Statistics
Fiscal Year 2013
30,000-40,000 products in stores
700,000 products on web
2nd fiscal qtr (Aug 4th highest volume)
4th fiscal qtr (Feb 2nd, lowest volume)
$1.9b in cash & cash equivalents
23% decrease in cash
Long-term debt increased by 55% in FY 2013 over FY 2012 from $9.5b to $14.7b. Overall the liabilities increased by 20% from $23.3b to $28b.
Total assets declined by 1.4%
Shareholder's equity decreased by almost 30%
$145m - FY2012 - China store closings
Inventory markdown $10m
$135m goodwill
Clear and not excessive
Management Signoff
Auditor Signoff
Long-term debt increased by 55% in FY 2013 over FY 2012 from $9.5b to $14.7b. Overall the liabilities increased by 20% from $23.3b to $28b
Income Taxes
Revenue is recognized, net of estimated returns and sales tax,
at the time the customer takes possession of the merchandise or receives services.
Recorded when payment is received from customer before merchandise or service is received
Sale of gift cards

Inventories are stated at the lower of cost (FIFO) or market, with approximately 74% valued under the retail inventory method.
Net receivables of $1.3b in the 2013 fiscal year
$1.6b for FY 2013 & 2012
% of net sales was 2.1% for both FY 2013 and FY 2012
Buildings and Equipment - Straight-line method
65% of net sales in 2013 ($51.4b)
65% of net sales in 2012 ($48.9b)
Combined tax rates were approximately 36.4% for FY 2013
37.2% for FY 2012
IRS Tax audits 2008-2011
40,000 items in store
500,000 items on web
2nd fiscal qtr (Aug 4th highest volume)
4th fiscal qtr (Feb 2nd, lowest volume)
Cash and cash equivalent decreased by 28% YOY
6% increased in Inventory YOY

Increase in short-term borrowing
Increase of 12% in long-term borrowing
Decreased by 14%
Management Signoff
Auditor Signoff
No accounts receivable recorded on the balance sheet
Agreement w/ GE Capital Retail
Michael Pelardis
Marica Smith
Alejandro Torres
Swamy Vasudevan
Strong
Standards
Stockholders
Value
Improvement
Product
Differentiation
Business
Strategy
Key Merchandising
Improve Customer Experience
Lowering Unit Cost
Innovative Products
Display Techniques
Alejandro Torres
&
Marica Smith
Represents 2.74% of Net Sales FY13
Straight Line Depreciation Method
$34.9m in FY13 / 65.4% of Net Sales
foreseeable future
Full transcript