“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,” Lowe’s president and CEO Marvin R. Ellison says in a statement. “We believe our people are the foundation of our business and essential to our future growth, and we are making every effort to transition impacted associates to nearby Lowe’s stores.”
Ellison has been quite active since taking the reins of the Mooresville, N.C.-based retailer a few months ago. The chain, founded in 1946, operates more than 2,390 home improvement and hardware stores with about 310,000 employees.
“After leaving J.C. Penney and beginning his tenure as Lowe's CEO in July, he quickly shuttered Orchard Supply Hardware, a chain the company had bought in 2013,” writes NPR’s Ruben Kimmelman.
That chain had 99 locations in California, Oregon and Florida. Also known as OSH, it was founded in San Jose, Calif. in 1931 as a co-op supplying fruit growers in what is now Silicon Valley. Lowe’s brought most OSH stores out of bankruptcy in 2013 following their spinoff from Sears Holdings Corp., as James Rufus Koren reports for the Los Angeles Times.
(Sears itself “is wrapping up an expanded bankruptcy financing package that will keep it afloat past the holiday season,” Lillian Rizzo and Suzanne Kapner report for the Wall Street Journal this morning.)
This is one case, apparently, of retail malaise that is not caused by the Amazon flu.
“Lowe’s and its rival Home Depot have proven to be largely Amazon-proof, because Amazon does not sell lumber or other heavy, bulky home improvement products. But Lowe’s is struggling to keep up with Home Depot. Last year, Home Depot’s revenue hit more than $100 billion, while Lowe's sales were below $70 billion. Lowe’s stock price has also lagged behind its rival, leading to pressure from activist investors,” writes Jordan Valinsky for CNN Business.
Valinsky also points out that Ellison was a top executive at Home Depot for more than a decade before joining Penney. That fact likely played a part in some boardroom intrigue.
“Activist investor D.E. Shaw built a stake in Lowe’s earlier this year. Lowe’s previous CEO Robert Niblock said in March he would retire, a week after three new directors joined the board as part of an agreement with D.E. Shaw. Another activist investor, William Ackman’s Pershing Square Capital Management LP, also announced a stake in the retailer this summer, and planned to support Mr. Ellison, according to people familiar with the matter,” reports Sarah Nassauer for the Wall Street Journal.
There are 31 locations closing in Canada, most of them part of a $3.2 billion acquisition in 2016 of Rona, which had 496 corporate and dealer-owned stores.
“Rona has paid for the price for a restructuring by American hardware giant Lowe’s, with 24 of the outlets operating under the Rona brand being shut down across Canada -- nine of them in Quebec,” according to a Press Canadienne report in the Montreal Gazette. There were also nine in Ontario, six in Newfoundland and Labrador, two in Alberta and one in British Columbia.
“Also, Lowe’s Canada, with a head office in Boucherville, will close its regional support centers in Mississauga, Ont., and Saint John, N.L., and consolidate those activities in the Montreal suburb,” the Press Canadienne report adds. “Two pre-fabricated parts plants in Newfoundland and B.C. will also stop operations.”
Indeed, a story like this quickly becomes local.
“Lowe’s To Close 51 North American Stores; Including Gurnee, Granite City, Portage Locations,” the headline reads on CBS Chicago’s website. The first two locations are in Illinois; the last in Indiana.
“Lowes Closing Stores, Including 2 in the Bay Area,” NBC Bay Area tells us.
Even the Big Apple media got provincial. “Lowe's Closing Its Manhattan Stores, Only Three Years After Opening in the City,” says 4 New York.
“The location on the Upper West Side was already closed as of Monday morning; the status of the Chelsea store was not immediately clear,” the story continues. … The company only entered the Manhattan market in 2015, with custom-designed, small-format stores that skipped on lawn mowers and offered more products geared toward apartment dwellers.”
Apparently it’s tough to sustain a business on sales of Roach Motel and Ty-D-Bol.