Lowes lowers dieting to better compete with Home Depot.
The company, who recently employed Marvin Ellison from JCPenney (]) to his CEO, said that it closes its orchestra stores for Orchard Supply Hardware and plans to slash inventories at their Lowes stores. JCP
Home Provider reported results that increased Wednesday forecasts thanks to a healthy housing market. Shares increased more than 7% in early trading on the news.
But Lowes ( lowered its sales and profit prospects for the year. [1 )
Sales in Lowe's stores opened at least one year increased by 5.3% in the second quarter. That sounds impressive until you think Home Depot sales increased by more than 8%.
Ellison does not seem afraid to make any major changes to help Lowe become more competitive.
The company said Wednesday that 99 of the Orchard Supply Hardware stores, which Lowes own in California, Oregon and Florida, and a distribution center will be shut down at the end of the fiscal year.
Orchard Supply Hardware has 4 300 employees. Ellison said in the results release that the chain's workers will be given "priority status" if they apply for other jobs at Lowes and will also receive job placement assistance and retirement.
Lowe has purchased Orchard Supply Hardware just for five years ago for $ 205 million.
The company said Wednesday that its revenues were lowered by $ 230 million due to planned closures. Lowe is also expected to receive additional 390 to 475 million dollars in costs in the second half of the year when closure.
This is one of the reasons for the weaker guidance. But Lowe's also plans to shake up the product range in its stores – which will hurt sales in the short term.
Ellison said that Lowes wants to "aggressively rationalize inventory equipment" and cut down on poorer results.
And, if not enough, Lowe joined David Denton, currently CFS of CVS ( to be his new CFO. )
Lowe said that Denton will join the company after CVS completed its acquisition of the insurer Aetna ( which is expected to close sometime before the end of the year. Lowe's current CFO, Marshal Croom, plans to retire in October. )
The employment of Denton is the latest in a series of executive shakeups that have taken place since Ellison joined Lowes.
In July, Ellison announced the restructuring of the C suite, saying that the company eliminated the senior operator and chief executive officer and several other senior executives.
CNNMoney (New York) First published August 22, 2018: 10:12 ET).