Lowe’s Companies Inc., an establishment that retails home improvement materials, is set to close at least 51 underperforming store branches in both the United States and Canada. The closure will happen on Monday as it continues to lose to Home Depot, its direct competitor.
Lowe’s has not given any details about the staff lay-off or closing stores yet. Some of their branches on deck to close Monday are in Chelsea, Manhattan, and Broadway, followed by their 99 Orchard Supply stores located in California.
In the recent quarters, Lowe’s tried to catch up with Home Depot to no avail. Its competitor is said to generate twice their sales. The long winter in North America impacts the company’s performance and added to its need to close down.
Americans have been spending less on home improvement recently. The company’s official reassessment strategists annually evaluate their business portfolio and running sales and decided it was better for the company to close retail locations.
Lowe’s sales were also affected by the increasing number of online retailers like Amazon and other e-commerce SMEs. A number of their competitors also shifted to offering online options because of the operational cost advantages.
The reassessment and store strategy reconstruction was made by Lowe’s newest Chief Executive Officer, Marvin Ellison. He boarded the company in July 2018. He reviewed the real estate group and promised to remove unresponsive and unmoving business to reduce income loss and expenditures.
Lowe’s loss between $390 million and $475 million due to the lack of success at the Orchard Supply chain. The closure cost the company 28 to 34 cent shares. That is also equivalent of $300 million to $365 million.
The charges were not part of the company’s August 2018 projection. In the projection, Lowe’s was expected to earn an amount of $4.50 to $4.60 shares by the end of the fiscal year, February 1, 2019.
Lowe’s operates 300 stores in Canada and almost 1,800 in the United States. Store closure completion will be completed by February 2019.
Though this move might sound negative by some, Seth Sigman, an analyst from Credit Suisse is confident that this step will improve the company’s productivity and sales.