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Lowe’s Will Close 51 Underperforming Stores in the US and Canada

Rajiv  Nanjapla - Author
By

Nov. 5 2018, Published 11:01 a.m. ET

Store closures

In a statement it released on November 5, Lowe’s Companies (LOW) announced that it would be closing 20 stores in the United States and 31 stores in Canada as part of its strategic reassessment initiative. The company expects the closing down of these underperforming stores to strengthen its store portfolio and allow it to focus on its profitable stores.

The closure of these stores is expected to be completed by February 1, 2019.

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The announcement is expected to negatively impact the company’s 2018 EPS by $0.28 to $0.34 per diluted share, which wasn’t included in the outlook it provided on August 22 at the time of the announcement of its second-quarter earnings results. The company’s management has stated that it will provide additional details on the impact of its store closures when it announces its third-quarter earnings results on November 20.

During its second-quarter earnings call, the company’s management announced that it would be closing all 99 of its Orchard Supply Hardware stores and its distribution facility by the end of 2018 to focus on its core home improvement business.

Stock performance

The announcement didn’t have much of an impact on Lowe’s stock price. It was trading flat in premarket hours today. YTD (year-to-date), the company’s stock price has returned 4.2%. During the same period, peers Home Depot (HD) and Williams-Sonoma (WSM) have returned -5.1% and 22.1%, respectively, YTD.

The stock price of the SPDR S&P Homebuilders ETF (XHB), which has invested ~18.3% of its holdings in home improvement retailers, has fallen 21.0% YTD.

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