Lowe’s to close dozens of un­der­per­form­ing stores

The Herald (Rock Hill) - - Business - BY KATHER­INE PERALTA kper­alta@char­lot­teob­server.com Kather­ine Peralta: 704-358-5079, @katieper­alta

Lowe’s is clos­ing nearly 50 un­der­per­form­ing stores across the U.S. and Canada.

The Mooresville-based home im­prove­ment re­tailer an­nounced early Mon­day that it will shut down 20 stores in the U.S. and 27 in Canada, as well as four spe­cialty fa­cil­i­ties and re­gional of­fices in Canada, in an ef­fort to “fo­cus on its most prof­itable stores and im­prove the over­all health of its store port­fo­lio.”

None of the U.S. stores that are clos­ing are in the Caroli­nas, ac­cord­ing to the list posted on Lowe’s web­site.

Lowe’s said it will con­duct store-clos­ing sales, and all of the af­fected lo­ca­tions are ex­pected to close by Feb. 1. Its two Man­hat­tan stores will close im­me­di­ately, with the in­ven­tory trans­ferred to nearby lo­ca­tions, ac­cord­ing to the com­pany.

In a re­search note Mon­day, Credit Suisse an­a­lyst Seth Sig­man said Lowe’s’ de­ci­sion is “a pos­i­tive step towards im­prov­ing pro­duc­tiv­ity of the chain.” Sig­man noted that the stores set to close may have been hurt by their prox­im­ity to Home De­pot stores and other Lowe’s stores.

Of the U.S. stores be­ing closed, 75 per­cent have an­other Lowe’s within 10 miles, and 90 per­cent have a Home De­pot within 10 miles, Sig­man wrote.

Lowe’s said af­fected U.S. em­ploy­ees will have the op­por­tu­nity to trans­fer to sim­i­lar roles in nearby lo­ca­tions.

Lowe’s will of­fer sev­er­ance to those who aren’t of­fered jobs at nearby stores, as well as to el­i­gi­ble Cana­dian em­ploy­ees, spokesman Steve Salazar said. “We will work hard to en­sure this tran­si­tion is as smooth as pos­si­ble for our as­so­ci­ates and cus­tomers,” he added.

Lowe’s op­er­ates 2,390 home im­prove­ment and hard­ware stores, in­clud­ing 1,740 in the U.S. The ma­jor­ity of the Cana­dian stores set to close are un­der the Rona ban­ner, a chain that Lowe’s bought in 2016 for $2.3 bil­lion.

It’s un­clear how many work­ers are af­fected. Lowe’s said em­ploy­ees in the af­fected stores were no­ti­fied of the clo­sures Sun­day evening.

The store clo­sures are ex­pected to re­duce the com­pany’s an­nual earn­ings by 28 to 34 cents per di­luted share, Lowe’s said.

Col­lec­tively, the stores slated to close were los­ing more than $34 mil­lion a year, CEO Marvin El­li­son told em­ploy­ees Mon­day morn­ing in an in­ter­nal memo ob­tained by the Ob­server.

“Some of you may ask the ques­tion, ‘If these stores are per­form­ing so poorly, why didn’t the pre­vi­ous man­age­ment team close them?’ That’s a great ques­tion that I can­not an­swer,” El­li­son said in the memo.

“If we are truly se­ri­ous about mak­ing our com­pany bet­ter, we are ob­li­gated to take this ac­tion.”

PLAY­ING CATCH-UP

De­spite a strong hous­ing mar­ket that’s ben­e­fited the home-im­prove­ment re­tail in­dus­try, Lowe’s has still trailed its larger com­peti­tor, At­lantabased Home De­pot.

To catch up, Lowe’s has been work­ing to slash costs and boost prof­its in re­cent years. Even in his first few months since be­com­ing CEO in July, El­li­son has taken a num­ber of steps to im­prove the com­pany’s fi­nan­cial health.

This sum­mer, for in­stance, Lowe’s an­nounced it was shut­ting down its Or­chard Sup­ply Hard­ware chain, which the com­pany bought in 2013 for $205 mil­lion, in or­der to “fo­cus on its core home im­prove­ment busi­ness.” Lowe’s is in the process of clos­ing all 99 Or­chard Sup­ply stores – which are in Cal­i­for­nia, Ore­gon and Florida – as well as a dis­tri­bu­tion cen­ter, by the end of the year.

El­li­son has also ini­ti­ated some ma­jor shake-ups in the com­pany’s ex­ec­u­tive lead­er­ship ranks.

Last week, for in­stance, Lowe’s hired See­man­tini God­bole, Tar­get’s se­nior vice pres­i­dent of dig­i­tal and mar­ket­ing tech­nol­ogy, as its chief in­for­ma­tion of­fi­cer.

Lowe’s also did away with a few high-pro­file po­si­tions, such as its chief op­er­at­ing of­fi­cer and chief cus­tomer of­fi­cer, and re­placed them with other roles that re­port di­rectly to El­li­son.

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