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May 26, 2020, 3:14 p.m. EDT

Lowe’s has identified 3 areas of focus for social distancing in its stores, including the garden area

Lowe’s credits a rise in customer satisfaction to the social-distancing adjustments

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By Tonya Garcia, MarketWatch


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Lowe’s made adjustments to its garden area to encourage social distancing

Lowe’s Cos. Inc. took a deep dive into where customers spend their time while shopping their stores and identified three areas to focus for social-distancing purposes: checkout, the outside garden and the paint counter.

Like all retailers, Lowe’s /zigman2/quotes/205563664/composite LOW +1.05%   is putting protocols in place to better protect workers and customers from the spread of the coronavirus. Among the many common measures, retailers are putting up shields at registers, added signs that remind customers to maintain their distance from one another, and are handing out hand sanitizer, masks and gloves.

Lowe’s took an even closer look at its stores to come up with its policies and made adjustments in these three areas.

Read: Lowe’s benefited from delayed DIY projects done during the coronavirus lockdown, while Home Depot saw professional projects put on hold

“To develop our social-distancing safety procedures, our team took a strategic, data-driven approach, tracking historical traffic patterns and identifying areas where customers tend to congregate,” said Lowe’s Chief Executive Marvin Ellison on the most recent earnings call, according to a FactSet transcript.

Lowe’s stores average 144,000 square feet, including the garden centers, Ellison said.

As an essential retailer, Lowe’s stores have been open throughout the pandemic. In an effort to encourage social distancing, access to paint and garden areas has been limited, among other measures. These limits impacted sales, Ellison said.

Still, Lowe’s reported profits and sales that beat expectations.

In garden areas, Lowe’s removed shelving and product to make more room, and traffic was restricted to a one-way flow.

Stores have been closed three hours early, at 7 p.m., to allow extra time for cleaning. But Ellison made a point that it was important to stay open for as long as possible so customers would have enough time to spread out their visits.

“Our store team was so effective at implementing and executing the enhanced safety guidelines that our customer-service scores improved 200 basis points year-over-year in the first quarter,” Ellison said.

See: Americans use their $1,200 stimulus check to splurge at Walmart and Target -- here’s what they’re buying

Lowe’s also benefited from an increase in do-it-yourself projects as customers stayed home and worked on things that had previously been put off.

“Quarter after quarter, the skeptics point out the shortcomings of Lowe’s performance,” wrote UBS analysts. “This time, it’s really hard to nitpick. It’s true that Lowe’s over-indexes to the DIY segment, smaller pros, and rural/suburban geographies. These segments outperformed in 1Q.”

UBS rates Lowe’s stock buy with a $140 price target, up from $130.

Stifel analysts say Lowe’s as a whole is operating at a high level, with garden areas, for example, that are “well maintained.”

“Long term, we see home improvement taking wallet, and Lowe’s could benefit from having more rural store locations if the trend of working from home continues and the want to be in the city wanes,” Stifel wrote.

Stifel rates Lowe’s shares buy and raised its price target to $149 from $94.

Lowe’s stock has gained 30% over the past year. The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.06%   is up 6.5% for the last year.

/zigman2/quotes/205563664/composite
US : U.S.: NYSE
$ 152.78
+1.59 +1.05%
Volume: 2.90M
Aug. 7, 2020 4:03p
P/E Ratio
25.79
Dividend Yield
1.44%
Market Cap
$115.35 billion
Rev. per Employee
$230,029
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/zigman2/quotes/210599714/realtime
US : S&P US
3,351.28
+2.12 +0.06%
Volume: 2.28B
Aug. 7, 2020 5:10p
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Tonya Garcia is a MarketWatch reporter covering retail and consumer-oriented companies. You can follow her on Twitter @tgarcianyc. She is based in New York.

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