Shares of Lowe’s Companies (LOW) are in focus after the home improvement retailer announced plans to close 51 stores in the U.S. and Canada as part of an ongoing strategic reassessment. The expected impact on fiscal 2018 earnings per share is expected to be 28c-34c.
STORE CLOSURES: Lowe’s said on Monday morning that it will close 20 underperforming stores in the U.S. and 31 in Canada as part of its ongoing strategic evaluation. The home improvement retailer said most employees at the stores closing will be offered similar jobs at a nearby store, as most of the stores being closed are within 10 miles of another store. The company expects the store closures to be completed by February 1, 2019, the end of its 2018 fiscal year. The expected financial impact of the closures is 28c-34c per share to earnings, said Lowe’s, which plans to provide more details on the impact of the store closings in its next quarterly earnings release, currently scheduled for November 20. “While decisions that impact our associates are never easy, the store closures are a necessary step in our strategic reassessment as we focus on building a stronger business,” Chief Executive Marvin Ellison said in a statement.
WHAT’S NOTABLE: Lowe’s in in the midst of a turnaround under new CEO Ellison, the previous CEO of J.C. Penney (JCP). In August, Ellison said Lowe’s will close all Orchard Supply Hardware stores nationwide by February 1. The company acquired Orchard Supply in 2013 and had 99 locations prior to the announcement. At the time, Ellison said that in addition to the decision to exit Orchard Supply, “we are developing plans to aggressively rationalize store inventory, reducing lower-performing inventory while investing in increased depth of high-velocity items. Exiting Orchard Supply Hardware and rationalizing inventory are the driving force behind the changes to Lowe’s Business Outlook.” He said Lowe’s strategic reassessment was “ongoing” as “we evaluate the productivity of our real estate portfolio and non-retail business investments.” In September, Gordon Haskett analyst Chuck Grom told the New York Post that Ellison is borrowing from his former employer Home Depot’s (HD) playbook, adding that “He’s going to replicate the Home Depot playbook where he can,” Gordon Haskett analyst Chuck Grom told The Post. Under Ellison, who took the helm in July, the company has eliminated four senior positions, while creating two new senior roles for stores and supply chain.
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