Lowe’s to Close 47 Stores in the US and Canada

It’s been a bad year for Lowe’s after the company announced it is closing 47 of its underperforming North American stores. The company stated this decision will help the hardware chain focus on it’s “most profitable stores”, and is necessary to step in their strategic assessment as they focus on building a strong business.

This isn’t the first time a retail store abruptly announces its closure. The decision comes after many successful stores have adjusted their business strategies due to Amazon, including Kmart, Sears, and Toys “R” Us. The advantage Lowe’s and it’s rival Home Depot have is that they are largely “Amazon-proof” since Amazon does not sell lumber or any heavy bulky home improvement products

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Yet, Lowe’s is struggling to keep up with Home Depot’s revenue, after it was more than $100 billion last year, while Lowe’s sales were below $70 billion. Earlier this year Lowe’s decided to incorporate home improvement veteran and New Chief Executive Officer Marvin Ellison, to turn around the company. Ellison was a top executive Home Depot for more than a decade, recently serving as JC Penney’s CEO.

Ellison has made big strategic decisions, including closing all Orchard Supply Hardware stores and slashing inventory at its Lowe’s Stores. The Orchard Supply chain cost the company between $390 million and $475 million in write-downs. Low’s announcement would result in charges of 28 cents to 34 cents per share or $300 million to $365 million in pretax expenses.

He believes that targeting professional home builders and construction companies with higher quality equipment and tools, additional discount and better customer service will improve Lowe’s. Sales to home building pros make up 45% of Home Depot sales, but only 30% of Lowe’s sales.

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Lowe’s, which operates about 1,800 U.S. stores and 300 in Canada, will shut down 20 stores in the U.S. and 27 in Canada. The company stated the “majority” of the shuttered stores are within 10 miles of another Lowe’s location. Four offices and specialty facilities in Canada will also close by February 1, 2019.

As for the employees who will be affected, the company stated they will try to find jobs at a nearby store.