TORONTO - American home improvement giant Lowe's is expanding its Canadian presence into Calgary next year, a move that will heat up competition for hardware and renovation retailers like Rona Inc. (TSX:RON) and Home Depot.
The company said Monday that it will open three new stores in Calgary, the home of Canada's oil and gas industry, and one of the country's fastest growing cities.
Lowe's Canada president Alan Huggins said in an interview the company plans to expand further across Western Canada, with stores in Edmonton, Saskatchewan and also British Columbia, though launch dates haven't been announced.
"The next logical place for us to go is into Western Canada, particularly given the robustness of that economy," Huggins said.
The expansion and new hires at its existing stores will add about 1,500 jobs in Canada next year, the company estimated.
Lowe's entered the Canadian marketplace nearly two years ago with a handful of stores in Ontario. Since then, it has slowly added locations across the province, and eventually plans to expand into Eastern Canada with a target of 100 stores across the country.
In Ontario, Lowe's is in talks with Wal-Mart Canada to acquire five of the six Sam's Club supercentres it has announced will close.
The competition has put the pinch on other retailers, including Rona Inc. (TSX:RON), the largest Canadian competitor, Home Depot, and smaller independents.
Last month, Quebec-based Rona posted a 6.5 per cent drop in third-quarter profits to $49.1 million while it said revenues weakened on lower housing starts, lagging consumer confidence and poor weather.
Lowe's Canada refuses to disclose its earnings, which are included the U.S. company's operations.
"We've been really pleased with the reception we've gotten from them (customers), obviously enough so that we're ready to continue this expansion," Huggins said.
He said the company hasn't suffered much from the economic downturn or weak consumer confidence
"We didn't see a slowdown... we've continued to flourish," he said.
Overall for the quarter ended Oct. 30, Lowe's Companies Inc. (NYSE:LOW) reported a profit of US$344 million, or 23 cents per share, from $488 million, or 33 cents per share, in the same quarter last year.
Revenue edged down three per cent to $11.38 billion, narrowly beating an average analyst estimate of $11.28 billion.
Sales in stores open at least one year fell 7.5 per cent in the quarter.
Hardware retailers in Canada have been helped by the federal government's popular home renovations tax credit, which has inspired many Canadians to make changes to their homes.
Huggins said Lowe's doesn't have a way to measure how the tax credit has affected its sales, but he believes it has only helped them.
"We haven't been open that long that we can see a long, continuous pattern," he said.