Home Depot, Lowe's Keep Eyes on the Prize

The upshot is that neither company will be leading us out of a recession anytime soon. But lurking under all that red ink are indications that both companies are staying true to their long-term goals. Despite the fact that they've lost money and customers over the past two years, they're focused on what they can control: how to improve their businesses no matter what the economic climate.

For Lowe's, the challenge is to escape the role of perennial runner-up. Lowe's currently operates 1,670 stores in the U.S. and Canada (compared with 2,200 for Home Depot), and it's determined to close the gap with its larger rival.

So, despite the bleak outlook for retailers, Lowe's opened 21 new stores in the first quarter. That pace may be slower than execs planned a few years ago, but it's still impressive given the current state of customer spending.

Home Depot, on the other hand, is battling for its reputation. Over the past decade or so, the company's customer-service rankings slid, due in part to cost-cutting initiatives by former Chief Executive Robert Nardelli (he of the $200 million severance package).

Current CEO Frank Blake knows that repairing Home Depot's image is one of the top projects on his to-do list, highlighting the issue in the company's earnings report. "Our markets, and the consumer in general, remain under pressure," he said in a statement. "But we continue to make progress on improving our business as evidenced by stronger customer satisfaction ratings."