Lowe’s to close Orchard Supply Hardware stores
Lowe’s will close all Orchard Supply Hardware stores nationwide by Feb. 1, the company announced Wednesday.
Orchard Supply Hardware, founded in 1931 in San Jose, California, and acquired by Lowe’s in 2013, has 99 stores in California, Oregon and Florida. Lowe’s is closing the stores to focus on its core home improvement business, the company said.
Employees were told about the decision Tuesday, and all stores will be open Wednesday for normal business hours. Orchard Supply Hardware stores will have store closing sales beginning Thursday with a plan for all stores to be closed by the end of the company’s fiscal year. Lowe’s will also close a distribution center in Tracy, California, the company said.
“While it was a necessary business decision to exit Orchard Supply Hardware, decisions that impact our people are never easy,” Lowe’s president and CEO Marvin Ellison said in a statement. “We will be providing outplacement services for impacted associates, and they will be given priority status if they choose to apply for other Lowe’s positions.”
Lowe’s took a $230 million noncash pre-tax charge during the second quarter based on its “strategic reassessment” of Orchard Supply Hardware, the company said.
The Mooresville, North Carolinabased hardware chain is refocusing on “retail fundamentals,” Ellison said, and will tighten its store inventory as Lowe’s foresees a demanding retail environment.
The company lowered its full-year sales forecast to 4.5 percent, down from the previous forecast of 5 percent. Sales at stores open at least one year are expected to increase about 3 percent for the year, down from the previous forecast of 3.5 percent.
Lowe’s posted second-quarter sales of $20.9 billion, up 7 percent from the same period a year ago, surpassing expectations of $20.8 billion, based on analysts polled by S&P Global Market Intelligence.
However, net income fell 7 percent to $1.52 billion, or $1.86 per share, missing expectations of $1.65 billion and $2.01 per share.
Lowe’s shares (LOW) were up 8 percent to $108.43 in morning trading Wednesday.
Lowe’s acquired Orchard Supply Hardware in 2013 after Orchard Supply, which was spun off from Sears Holdings in 2011, filed for bankruptcy.
The news about the stores’ closing led many longtime customers to reminisce on Twitter, which had been expanding in Florida. “Deeply saddened,” one person tweeted.
“I am going to miss them big time,” wrote another longtime customer.
Lowe’s, with 2,155 stores in the U.S., Canada and Mexico, also named current CVS Health executive vice president and CFO David Denton as its CFO.