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‘Aggressive hiring’ and other changes ahead for Lowe’s, CEO says

Lowe’s is closing underperforming stores in US

Find out steps Lowe's has taken to change its course
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Find out steps Lowe's has taken to change its course

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.

In an Observer interview on 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 its 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 million-square-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 store employees’ time.

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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, like 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 in-house 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.

In one of his first moves as CEO, Ellison this summer announced a major restructuring of its top leadership, including eliminating the chief operating officer and chief customer officer positions.

Also this summer, Lowe’s announced plans to close its Orchard Supply Hardware chain, which the company bought in 2013 for $205 million, in order to focus on its main home-improvement business.

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.

As the retail and sports business reporter for the Observer, Katie Peralta covers everything from grocery-store competition in Charlotte to tax breaks for pro sports teams. She is a Chicago native and graduate of the University of Notre Dame.
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