Lowe's 2003 Annual Report Download - page 6

04 LOWE’S COMPANIES, INC.
wanting to participate in the American dream. This strength has led to record levels of home ownership in the U.S., which stood at 68.6
percent at the end of 2003.
These macroeconomic forces were not the only driver of our past success, but they provide confidence that the future is bright for Lowe’s.
Our strength and the strength of the home improvement industry is driven by several factors
— demographic, social and economic.
First, evolving demographic trends have been, and will continue to be, a positive force for Lowe’s and the home improvement industry.
The large and influential Baby Boomer population is entering the peak second-home buying age and is driving a robust second-home market.
Driven by this phenomenon, some estimates suggest that 150,000 second homes will be built each year for the rest of this decade. In
addition, Boomers are more time-strapped than ever and are looking for solutions that make their lives easier. One-stop-shopping
convenience and an ever-expanding array of installation services makes Lowe’s a destination to fulfill their needs.
Generation Xers are in the family formation years and are looking for ways to improve their home’s function, safety and appeal. This
generation values information that allows it to initiate projects. Our informative signage and knowledgeable employees provide just the
resources these customers demand.
And finally, Echo Boomers, also known as Gen Y, are focused on customization, frequently changing everything from paint
to flooring to faucets to fulfill their desire for distinctiveness. This generation is coming of age and is actively influencing many purchasing
decisions today. With over 40,000 products in stock, and hundreds of thousands more available by special order, these customers can find the
products they’re looking for at Lowe’s.
The second force driving home improvement is diversity. Home ownership among minorities is growing rapidly in the U.S., driven by
an immigrant population focused on the American dream of owning a home. Harvard’s Joint Center for Housing Studies reports that in
2001, minorities accounted for 32 percent of first-time homebuyers, and from 1995 to 2001, they represented 60 percent of the increase in
households. Bilingual employees, targeted advertising and unique products to meet varying cultural styles are just a few of the things we’re
doing at Lowe’s to meet the needs of our increasingly diverse customers.
Third, Americans are more focused than ever on the comfort, security and warmth that home has to offer. As Americans deal with a
tumultuous geopolitical environment and the stress of everyday life, keeping in touch with the people who matter remains a top priority, and
they’re doing it at home. Home ownership was a cornerstone of the American dream long before interest rates began their latest decline in
2001, and we believe a focus on the home and home improvement will remain part of the American dream even as interest rates rise.
Finally, a growing trend in home improvement is a phenomenon known as “serial remodeling.” Inspired by innovation and energy
efficiency, home improvement is being driven less by need and more by a sense of style and a desire to trade-up. Many customers are
repainting their rooms with the most fashionable new color or replacing a working washer and dryer with new, more efficient appliances that
clean better while using less water and energy. Innovation is the key, and we encourage our vendors to ensure they are providing inspirational
products for our customers. This trend is in lockstep with our up-the-continuum merchandising strategy that ensures our customers will find
quality and innovation in the products we offer at everyday low prices.
We’ll capitalize on these trends by adding stores as well as enhancing existing stores to ensure we’re providing exactly what our
customers are looking for. Lowe’s track record for keeping its finger on the pulse of the consumer is strong. In early 2004, Lowe’s was named
Most Admired Specialty Retailer by FORTUNE®magazine for a second year in a row. That recognition is representative of the service our
employees provided our customers and the financial results we delivered.
I recently announced my plan to retire at the end of fiscal 2004, and Robert Niblock has been named chairman and chief executive officer-
elect. I have full confidence in his ability to build on our success and take Lowe’s to its next level of growth and development. With Lowe’s
strategic course firmly in place and a deep and talented management team committed to ensuring Lowe’s future success, I am convinced that
now is the ideal time for me to continue the process of handing the reins of the company over to Robert. I look forward to working closely with
him this year as we execute a smooth and orderly transition. Under the direction of Robert and Lowe’s seasoned management team, and with a
bright outlook for the home improvement industry, I am confident we can look forward to many more years of success.
robert l. tillman
chairman of the board and chief executive officer
April 16, 2004 Mooresville, NC