Lowe's 2015 Annual Report Download - page 26

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nationwide. We are also reconnecting with Pro customers through targeted marketing, as well as Pro-focused events to drive
awareness and generate new business.
In an effort to drive expense productivity during 2015, we effectively managed payroll hours on solid comparable sales growth
and improved productivity in advertising through targeted spend. We increased the efficiency and effectiveness of our
marketing spend through optimized media allocation, presence in targeted digital advertising, expanded social media presence,
and reduced print advertising, all while maintaining our customer reach and improving exposure. In addition to payroll and
marketing expenses, we remain committed to identifying and implementing additional expense efficiencies by leveraging our
scale to achieve cost savings on indirect spend, which improves the flow through of sales dollars to operating profit.
We also continued to enhance our omni-channel capabilities in 2015. Online, we have enhanced our customer experience and
presentation through Lowes.com, including improved product search, integrated and upgraded product videos, enhanced
product presentation, and simplified product groupings to make it easy for customers to make their selections. Our in-home
selling networks, including both interior and exterior project specialists, continued to expand with exterior specialists available
across all US stores and interior specialists expected in all stores by the end of fiscal year 2016.
Looking Forward
Economic forecasts for 2016 suggest the outlook for the home improvement industry remains positive. Continued support
from steady job growth and improved household incomes, as well as favorable trends in the housing market, should keep home
improvement growth buoyant. Despite recent volatility in the financial markets, the fundamentals for continued growth in
consumer spending remain intact. Consumers should continue to benefit from improved household financial conditions and
lower gas prices on top of moderate job and income growth.
As we move into 2016, we continue to take a prudent approach to managing our portfolio of businesses, making decisions that
will shape how we better serve and connect with customers. With the decision to exit the Australian home improvement market
during the fourth quarter of 2015, we will focus our resources on areas of the business where we see greater potential return on
investment. In early 2016, we announced a definitive agreement to acquire RONA inc. (RONA), a major Canadian retailer and
distributor of hardware, building materials, and home renovation products. This transaction is expected to accelerate Lowe’s
growth strategy by significantly expanding our presence in the Canadian market through the addition of RONA’s attractive
business and store locations. The transaction is subject to RONA common shareholder approval and receipt of all necessary
regulatory approvals and is expected to close in the second half of 2016.
At the same time we are reinforcing our international business, we will remain focused on growing sales by continuing to
differentiate ourselves through better customer experiences that make us the project authority, improving our product and
service offering for the Pro customer, and enhancing our omni-channel capabilities to support customers at every step of their
home improvement journey. We will also focus on driving productivity and profitability through payroll and marketing
optimization and leveraging our scale to achieve cost savings on indirect spend. This strategic framework along with our
efforts to improve productivity and profitability give us confidence in our Business Outlook for 2016.