Lowe’s still plans changes to im­prove fi­nan­cial health

Houston Chronicle - - BUSINESS - By Katherine Per­alta

It has been a year of trans­for­ma­tion for Lowe’s, whose new CEO has taken ma­jor steps to im­prove the com­pany’s fi­nan­cial health, from closing stores to re­plac­ing ex­ec­u­tives. Now Marvin El­li­son, who took over the home im­prove­ment re­tailer in July, says more change is com­ing, in­clud­ing grow­ing its head­quar­ters in Mooresville, N.C.

In an in­ter­view Thurs­day af­ter the open­ing of a new ship­ping cen­ter in Ten­nessee, El­li­son said that in the next year, Lowe’s will be rolling out a new train­ing pro­gram for store em­ploy­ees, im­prov­ing its on­line ca­pa­bil­i­ties, and closing and open­ing stores.

El­li­son has been un­der pres­sure to boost the com­pany’s fi­nan­cial per­for­mance, which has lagged ri­val Home De­pot. In re­cent years, Lowe’s has looked to cut costs by lay­ing off work­ers in its stores and at the cor­po­rate level.

El­li­son pointed to the 1.1 mil­lion­square-foot fa­cil­ity in Coop­er­town, Tenn., as an ex­am­ple of the com­pany’s com­mit­ment to in­no­va­tion and mod­ern­iza­tion. The cen­ter, which is about 30 miles north­west of Nashville, will ship pur­chases di­rectly to the homes of cus­tomers who or­der on­line, as well as to stores.

Once it’s fully op­er­a­tional, the cen­ter will be able to ship 100,000 pack­ages a day and have the ca­pa­bil­ity to de­liver to 75 per­cent of the coun­try in two days or less, ac­cord­ing to Lowe’s.

The com­pany is in the process of de­vel­op­ing an­other such fa­cil­ity on the West Coast to reach the other 25 per­cent, El­li­son said.

Such fa­cil­i­ties cre­ate a bet­ter eco­nomic model by help­ing to “take pres­sure off the stores,” he said, in­clud­ing by free­ing up em­ploy­ees’ time.

Even as it up­grades its on­line and de­liv­ery ca­pa­bil­i­ties, Lowe’s will al­ways need to in­vest in its brick-and-mor­tar stores, un­like many other re­tail­ers, said El­li­son, for­mer CEO of J.C. Pen­ney Co.

“I don’t an­tic­i­pate that on­line busi­ness will be­come such a big part of our busi­ness that our stores will be­come ob­so­lete,” he said.

One rea­son for that is home im­prove­ment re­tail­ers carry prod­ucts that are dif­fi­cult, ex­pen­sive and some­times dan­ger­ous to ship, such as lum­ber, con­crete, lawn­mow­ers and fer­til­iz­ers, El­li­son said.

An­other rea­son is that many cus­tomers re­quire some con­sul­ta­tion with their pur­chase. Roughly 60 per­cent of or­ders made on the Lowe’s web­site are picked up in stores, he added.

“What that tells us is stores are still pow­er­ful com­po­nents,” El­li­son said. “That as­so­ciate in the store is pow­er­ful be­cause they have the ex­per­tise. We know we have to ramp up our train­ing, and we’re work­ing on that.”

Lowe’s is de­vel­op­ing an in­house train­ing pro­gram for store em­ploy­ees that the com­pany will be rolling out in three to six weeks, El­li­son said.

Else­where in the com­pany, El­li­son said Lowe’s will con­tinue to in­vest in in­for­ma­tion tech­nol­ogy, a sec­tor now headed by for­mer Tar­get ex­ec­u­tive See­man­tini God­bole. El­li­son wouldn’t dis­close de­tails but said the in­vest­ment will in­clude growth at its cor­po­rate head­quar­ters.

“We’re go­ing to have some ag­gres­sive hir­ing plans that will im­pact us in our home lo­ca­tion to cre­ate some jobs,” El­li­son said.

Look­ing ahead, Lowe’s will con­tinue to re­view the per­for­mance of stores to gauge whether they are vi­able, El­li­son said. The com­pany will also con­tinue to open stores where it sees op­por­tu­nity, he added.

Last month, Lowe’s said it would close nearly 50 un­der­per­form­ing stores across the U.S. and Canada in an ef­fort to fo­cus on its most prof­itable stores and im­prove the over­all health of those lo­ca­tions.

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