The Remodeling Market Index, or RMI, rose by 6 points to 55 in the second quarter, and the expected growth in home sales and rise in demand for remodeling projects will help home improvement companies. To grab this opportunity, Lumber Liquidators Holdings Inc (NYSE:LL) plans to remodel more than 25 existing stores and expects to relocate its stores to highly traded areas in the second half of 2013. By adopting these strategies, the company anticipates gross profit in the second half will expand by around 2.3% on a year-over-year basis, and it anticipates annual comparable store sales to exceed $885 million this year from $743.4 million last year.
With the aim of grabbing growth opportunities in North America, Lumber Liquidators plans to increase it store counts by opening around 35 new stores in “stores of the future,” or SOF, format this year. The SOF format focuses on opening stores in posh locations, which will grow the sales of its high priced flooring combined with higher profit margin. To date, it has opened 12 new stores and announced the opening of its 300th store in Las Vegas. With this, the company placed itself as the largest specialty retail store of hardwood flooring in North America. These new format stores will offer more than 340 featured flooring varieties, which will attract more customers and enhance the shopping experience. By increasing store counts, Lumber Liquidators Holdings Inc (NYSE:LL) expects to generate higher revenue with an improved gross margin of around 40% this year compared to 38.5% last year.
Looking at the strong growth opportunities for home improvement products in the U.S., especially in the Hurricane Sandy affected region, Lowe’s is enhancing its online marketplace, and its recent acquisition in the Golden State will help grow earnings. Meanwhile, The Home Depot, Inc. (NYSE:HD), by rolling-out its “Buy Online, Ship-To-Store service” and upgrading its “First Phone” mobile technology, will be able to attract more customers, resulting in higher growth opportunities. Lumber Liquidators is opening new stores and remodeling existing stores to enhance its revenue and gross margin.
I recommend buying all of these stocks.
Madhukar Dubey has no position in any stocks mentioned. The Motley Fool recommends Home Depot, Lowe’s, and Lumber Liquidators. The Motley Fool owns shares of Lumber Liquidators. Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Improve Your Portfolio With These Home Improvement Companies originally appeared on Fool.com is written by Madhukar Dubey.
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