Local News

Fun Can Make Great Cents

Posted December 17, 1998

— What do you do with your weekends? If you're like many of us in North Carolina, you putter around your house, your yard, your garage and take care of various projects.

Some of you sit in front of the TV, watching football, basketball, baseball -- even ice hockey. And, while on the subject of sports, how about those Carolina Hurricanes!

North Carolina is now blessed with three major-league sports franchises, theHurricanes,the Panthers, and theHornets.

The Hornets aren't even playing; the Panthers might be better off if they weren't; and the Hurricanes lead their division in theNational Hockey League.

The Hurricanes, who have been the source of no small amount of derision onESPN,have now gotten the attention of those quick-witted, sarcastic talking heads. One of them now refers to the 'Canes as a "dangerous" team.

But why all this in a business column? Because major-league sports is big business. And it also has an impact on an entire economy.

Next year, the Hurricanes will move into anew arenain Raleigh that will be the envy of the National Hockey League.

And you heard it here first: I've been to several Hurricanes games; the operation is first-class; and this sport will be a success in the Triangle.

Going forward, I'm hearing that the team will make some off-season player acquisitions to make them even stronger for their Raleigh debut. The management of this team isn't dumb: They know a winner sells much better than a loser.

Next up is baseball, and talk is beginning to bubble a bit that Durham might be the best location for a major league team -- now that the Triad has turned thumbs down and the Charlotte market is not even filling up seats for the Panthers.

Durham would be a natural for two reasons: The great tradition of theDurham Bulls; and its location in the Triangle but significantly closer to the Triad than Raleigh.

Can Durham Bulls Athletic Park be upgraded to seat 48,000 people or so? I asked that question, and the answer I got was "maybe."

Remember, you heard all this here first.

But, back to my original point: What do you do with your weekends?

The reason I ask is because I want to spin a yarn about a North Carolina company that I have liked for a long time:Lowe's Companiesof North Wilkesboro. This is the company that increasingly is arming Americans with the supplies, materials and tools necessary to carry out those weekend projects.

Lowe's is arguably North Carolina's most successful homegrown retail operation. Solid management has grown the company from 15 stores in 1962 to more than 446 today in 25 states.

In November, Lowe's announced its purchase of Eagle Hardware, an $861 million California-based concern that will give the company 32 new stores and accelerate its previously stated intention of building significant market share in the Western United States.

Lowe's is a significant player in the home-improvement superstore business, but it remains a distant second to giantHome Depot.Both companies have benefited from a national housing market that has grown by 7.7 percent this year, and Lowe's has translated that into upward revenues and earnings.

In the third quarter, Lowe's reported a 26 percent increase in earnings as same-store sales rose by 4 percent. Shareholders in this company have had a merry ride: A $10,000 investment in Lowe's five years ago would be worth $76,768 now.

Lowe's intends to invest $1.5 billion to open more than 100 new West Coast stores in the next three to four years. Continued growth depends on the health of the economy, especially home construction. Given that both are projected to decline in 1999, look for slower growth from Lowe's.

Still, this company's balance sheet and financial performance are impressive, and Lowe's is rated a solid buy.

I'm taking off a couple of weeks. But my friend Mike Walden, an economist atN.C. State Universityand a big-time baseball fan, will be gracing you with his intelligent writing in my absence.

Have a great holiday, and a prosperous 1999! Dale Gibson is a Raleigh-based journalist who publishesThe Gibson Report,a weekly electronic newsletter focused on North Carolina business. Questions or comments may be directed to him by e-mail at dale@gibsonreport.com or by phone at 919-834-1033.

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