Lowe’s is closing 51 underperforming locations by February 2019 — 30 in Canada and 21 in the U.S. — as it restructures its business under new CEO Marvin Ellison. The closures are a “necessary step” in the retailer’s strategic reassessment, Ellison said in a statement. Lowe’s operates more than 2,300 stores across North America.
Most Lowe’s employees in stores set to close will be offered roles in nearby stores, according to the statement.
The retailer is the second-biggest player in the home improvement sector, but remains well behind The Home Depot in market share. Over the past 12 months, The Home Depot has outperformed Lowe’s in total revenue by nearly 50% ($104.32 billion to $70.51 billion), net income ($9.85 billion to $3.2 billion) and operating margin (14.5% to 8.9%).
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In the most recent quarter, sales in existing Home Depot stores rose 8% compared to a 5.2% rise atLowe’s— painting a picture of a strong second-place retailer trying to catch up with the market leader, rather than a laggard struggling against all other competitors.
The store closings will reduce Lowe’s Q3 earnings by between $0.28 and $0.34 per share, and were not included in the forecast the company provided in August 2018. At that time, Lowe’s said it expected to earn between $4.50 and $4.60 per share in the fiscal year ending Feb. 1, 2019.
In August, Lowe’s said it would close all Orchard Supply Hardware stores, the 99-store chain the company bought in 2013 for $205 million. The closing will cost Lowe’s an estimated $390 million to $475 million.
Lowe’s has undergone a management restructuring since former CEO Robert Niblock retired. Under Ellison, the company eliminated four C-Level positions: COO, Chief Customer Officer, Corporate Administration Executive and Chief Development Officer.
In August, Lowe’s appointed a new EVP of Stores who has a significant history with Ellison. Joseph McFarland worked under Ellison at his previous posts, at JCPenney and The Home Depot. Marshall Croom, the retailer’s CFO, retired in October, making way for former CVS Health CFO David Denton to fill the position.
Most recently, Lowe’s hired Seemantini Godbole, Target’s Senior VP of Digital and Marketing Technology, as its CIO. This move may be the most significant executive hire for Lowe’s in light of the technology developments Godbole oversaw at Target, which included the launch of its mobile applications, BOPIS program, guest order fulfillment, and REDcard customer loyalty offerings.
