Lowe's to Close 34 Stores in Canada -- WSJ
21 November 2019 - 7:02PM
Dow Jones News
By Dave Sebastian
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 21, 2019).
Lowe's Cos. reported another quarter of soft sales but raised
its adjusted full-year earnings targets and said it would trim its
store fleet in Canada as part of the home-improvement chain's
broader turnaround.
The company said Wednesday that it is closing 34 Canadian stores
early next year as part of its wide-ranging efforts to simplify and
improve its business. The company said it also plans to reduce the
number of banners it operates under in that country.
The Canadian restructuring is the latest of President and Chief
Executive Marvin Ellison's cost-cutting measures since he took the
helm last summer. Mr. Ellison was most recently chief executive of
the struggling department-store chain J.C. Penney Co. and was
previously a senior executive for Home Depot Inc.
In the past year, Mr. Ellison has closed other underperforming
stores and tried to improve the company's supply chain, customer
experience and merchandising.
The latest round of closures include 26 Rona stores, six Lowe's
and two Reno-Depot locations, the retailer said. The stores are
expected to close by Feb. 19.
The company booked a $53 million noncash charge related to the
Canadian strategic review in the third quarter.
Lowe's reported third-quarter earnings of $1.36 a share, up from
78 cents a share in the year-ago period and more than the $1.34 a
share that analysts polled by FactSet had expected. Adjusted
earnings were $1.41 a share, ahead of the $1.35 a share analysts
were anticipating.
Sales, however, declined 0.2% to $17.39 billion and missed the
consensus estimate of $17.69 billion.
The Mooresville, N.C., company lowered its full-year earnings
expectations, but raised them on an adjusted basis, as it
anticipates additional charges in the fourth quarter related to the
restructuring.
Shares of Lowe's were up 3.9% Wednesday.
Lowe's said sales at stores that have been open for more than 13
months were up 2.2% in the quarter, compared with rival Home
Depot's same-store sales growth of 3.6%. Lowe's sales growth in
recent years has lagged behind Home Depot, but during the first
quarter, Lowe's sales growth outpaced Home Depot for the first time
since 2016.
Comparable sales in the U.S. home-improvement business were up
3% in the third quarter.
The company attributed the growth in the U.S. to improved
customer experience, better merchandise category performance and
the continued growth of its business with professionals.
The company is now eyeing how it might expand the professional
business further. This quarter it rolled out a loyalty program for
its professional customers that it plans to take national in the
first half of 2020. The program, with the help of a customer
relationship management program, should allow it to be more
strategic with its marketing.
In the latest quarter, online sales in the U.S. grew 3%, adding
no real benefit to sales, Mr. Ellison said, adding that the
industry standard is closer to 20% growth. It is in the midst of a
major overhaul, including moving its website to the cloud in the
first half of 2020, Mr. Ellison said.
On a call with investors, Mr. Ellison said the company
underestimated the complexity of rebuilding its online
business.
"It's not difficult to grow dot-com sales. It's difficult to do
it correctly," he said. "Rather than having a bunch of
nonproductive promotions and other couponing events, we shut that
down and we basically said, 'How do we structure this business in
the right way?' "
In addition to the complexities of a turnaround, Mr. Ellison
said the company this year has faced other uncertainties such as
U.S. tariffs on trading partners.
"Overall, I feel great," Mr. Ellison said. "I think that we have
identified most of the surprises because we spent a lot of time
really digging into the areas of the business that carry the most
financial risk and the most financial benefit."
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
November 21, 2019 02:47 ET (07:47 GMT)
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