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 that all of the affected locations are expected to close by Feb. 1, the end of its 2018 fiscal year. Its two Manhattan stores will close immediately, and the inventory from those stores will be transferred to nearby locations, according to the company.
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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 store 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 currently 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 for Lowe’s, 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.”
Despite a strong housing market that’s benefited the home-improvement retail industry, Lowe’s has still trailed its larger competitor, Atlanta-based 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 that 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 shakeups 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.
In an interview with the Observer last month, Ellison said he considers Lowe’s a “transformation” and not a “turnaround” like J.C. Penney, where he spent the last three years as CEO. The priority for Lowe’s right now, he said, is improving basic “retail fundamentals.”
That includes, for instance, retooling inventory to ensure popular products are always in stock, and that Lowe’s clears out unpopular products that gather dust on the shelves.
“In this transformation, we’re going to focus on retail fundamentals first, and concurrently we’re going to modernize this company from ... a digital and IT perspective and from a supply chain perspective, and we’re going to create a truly great company,” Ellison said.