Lowe's Farms 51 Stores in the United States and Canada

November 5, 2018 / 7:18 pm GMT

By Reuters

Home improvement chain Lowe's Companies Inc. announced Monday the closing of 51 other underperforming stores in the United States and Canada while it was striving to compete with its competitor Home Depot Inc. in a real estate market slowing down.

Lowe's did not give details of the job losses in this move, which is closing stores in some upscale areas, including Broadway and Chelsea in Manhattan, and follows the closure of 99 Orchard stores Supply in California.

Warmed over the last few quarters by the impact of a long winter in North America, Lowe's is striving to find ways to catch up with the industry leader, Home Depot, whose sales generate on average twice more sales.

It also appears that Americans spend less on housing, while prices and demand have peaked after seven years of residential construction, although many factors underlying the health of the industry remain in place.

"The decision has been informed by the strategic reassessment work we have been doing over the last few months … We plan to continue to annually evaluate all activities and all elements of our portfolio," said the company. Reuters.

Although Lowe's is much smaller and less exposed to the presence of Amazon and other online vendors, the closures are a follow-up to a wave of similar actions by traditional US retailers in the face of increased competition. line.

The new CEO, Marvin Ellison, began a restructuring after taking office in July. He said he was reviewing his real estate portfolio, promising to remove the slow-selling products and put an end to unsuccessful projects.

Under Ellison, the company also removed four executive positions while creating two new executive roles for the stores and the supply chain.

"A new blood in the highest ranks has clearly been a catalyst for this decision, as we believe that the management team is more willing to examine the root causes of underperformance," said Jonathan Matuszewski, Jefferies analyst.

The liquidation of the Orchard Supply chain cost the company between $ 390 million and $ 475 million in write-downs. Lowe's said that Monday's announcement would result in charges of 28 cents a share at 34 cents a share, pre-tax charges of $ 300 million to $ 365 million.

The company, which operates approximately 1,800 US stores and 300 in Canada, plans to complete shutdowns by February, with the exception of some US stores that close immediately.

The 20 closed US sites are spread across several states, including New York, Texas and California, and 31 sites, including two plants in a few Canadian provinces, have also closed.

The majority of affected US stores are located within 10 miles of another store.

The company's shares were flat.