May 2012

The Journey Today’s LGS Our Global Team Our Roles Merchandising Success Stories What Can We Do - For You?

LGS Chartered &Open Taiwan Office(14 staff)

Open Hong KongOffice(12 Staff)

Closed Taiwan&Expand $ Hong Kong (26 staff)

OpenedShanghaiOffice

$1 BillionShipments

Dedicated Int’l LogisticsFunctions

MexicoStart-up(1 staff)

$3+ BillionShipments

$800mShipments

Became 6th Largest Volume Importer in U.S.

Expand Mexico(3 staff)

$3.5 BillionShipments

L G Sourcing, Inc. – The Journey

*Based on IM Projections

$400mShipments

1997 1998 1999 2000

Began w/ J&J Agency in India(12 staff)

2002 2003 2004 2005 2008 2009 2010 2016

Restructure China Offices

$2 BillionShipments

20122011

Became 4th Largest Volume Importer in U.S.

Shanghai16,223 sq. ft.

Sales Nearly $7 Billion

% of Company Sales Nearly 14%

SKUs 8,000

Countries 20

Suppliers 520

Factories 745

Ports 50

Containers 100,000+

Largest Office HKO, 61.7% of shipments

Fastest Growing Country Taiwan, +171% vs. LY

New Delhi

Monterrey

Hong Kong16,409 sq. ft.

Source: Global Sourcing Shipment Report

Our Sourcing Partners in India

1. Understand merchant goals via collaboration with IM Team

2. Develop vendor / product sourcing strategies

3. Vendor sourcing / evaluation

4. Negotiate superior pricing to achieve EDLC through innovative and quality programs with suppliers

5. Educate vendors on Lowe’s needs / expectations and collaborate with suppliers to identify / solve operational issues

6. Drive / manage product execution with the vendor and utilization of LGS / Lowe’s internal resources

1. Import PO execution

• Containerization

• Ensure pre-shipment inspection within ship window

2. Vendor Coordination

• Monitor vendor production schedule

• Provide vendor training

• On time shipments

3. Supply Chain Management

• Customs regulations

1. Shipment inspection and factory certification

2. Collaborate with factories to implement a QMS (Quality Management System)

3. Production Engineering team assists factories in troubleshooting quality issues

4. Ensure all import merchandise can meet or exceed Lowe’s quality standards and customer satisfaction

1. Coordinate and execute US packaging initiatives with global vendor partners to enhance Lowe’s Private Brands

2. Printer sourcing / evaluation - evaluate printing location / capacity vs. vendor location / demand to ensure balance and sufficient resources

3. Manage certified printers packaging quality to meet Lowe’s packaging standards

4. Localized training and support for vendors

5. Provide feedback to US on opportunities for improvement

Building great relationships and success… together!

“Fabulous trip all around!”Bob Gfeller

EVP Merchandising

Outdoor Fashion

“I would like to thank the U.S., Shanghai, and Hong Kong, for the best overseas trip I have experienced by far. It was quite apparent that the teams had appropriately prepared the vendors to present complete programs that were appropriately assorted for our 2013 program strategy.

For the first time, the vendors were aware of not only Lowe’s merchandising, but also our existing competitors’ and future competitors’ go-to-market strategy. Additionally, there was a much better understanding of our existing and planned customer segments than I had seen before in our LGS vendor base.

The product presentations were very focused, on trend per our style guides, with attention given to cost pressures.”…..Paula Matlock

Heating

“The trip was very productive as we were able to review quite a bit of product in a very short window….” Jon Cline

Intent

“Strategically diversify Lowe’s sourcing dependency from China by opening sourcing offices and expanding our presence in South Asia, India, Mexico and other sourced countries; to provide merchants high-quality, differentiated products from around the world at the lowest effective acquisition cost.”

FUTURE STATE: “Flexible Sourcing” – We will generate growth & profitability by providing low

cost / high quality and differentiated products from factories from around the globe.

CURRENT STATE: “China Sourcing” – A China-centric sourcing organization that provides

parent company, JV’s and subsidiaries quality, low cost import products in private

branded packaging.

17

Right mix of products for HI Large offices, operational best practices US Expat knows Lowe’s Merchandising and US Market Investment in superior next-generation staff Sourcing team category expertise Cultivating Vendor relationships Invest in Merchant travel

18

Current state LGS sourcing focus heavily dependent on China (91% shipments)

Why diversify

Political and Economic risks

Legislative risks – Anti-Dumping or other counterveiling duties

Some labor intensive products already moving

Imperative to change - Beyond China Current approach not yielding desired results

Implement best practices from China in other countries on a smaller scale

Incorporate best practices of other retailers

Provide most competitive suppliers and acquisition costs

19

Focus categories for Mexico / South America Increase time of Mexico team in US 1 dedicated US headcount focused on Mex/SA

Heavy travel

Extended stays in Mex/SA

Develop staff, Vendor relationships, focus categories

Invest in Merchant travel Build US relationships

20

• Invest in small office – 8 people

• 1 Lowe’s ExpatSouthEast Asia

• 1 US headcount

• Sourcing and Merchant travelMex/S America

• 1 US headcount

• Sourcing and Merchant travelIndia

Non-China $.3B $1.1B21

Lowe’s Global Sourcing and International Merchandising is available to support Lowe’s Merchandising Teams with EDLC opportunities to support EDLP?

What can we do to help you?

Together, with the International Merchandising Team in Mooresville, we’re open for business 24 hours* a day to support you!

* considering the 12-hour time difference between Asia, Mexico, India and the US there’s only a small window over any given weekend when there isn’t an LGS /Lowe’s International Merchandising office open for business.

Never Stop Improving!