Lowe's is finishing his business review and the verdict is: there are a lot of problems

Getty Images

Among the many announcements made by Lowe's Corp. with his third quarter results, Chief Executive Marvin Ellison said the home repair retailer had "largely completed" a review of the business and then listed all the issues facing the company.

"[O]Stockouts continue to put pressure on sales, "Ellison said in the call for results on Tuesday, according to a FactSet transcript. "[O]Our ineffective reset process continued to disrupt our stores and contributed to stockouts. In fact, all our categories of negative compositions, woodwork, paint, fashion fixtures and floor coverings have come under pressure due to poorly executed resets. "

And that's not all.

"[O]Our store processes are too complex, our work management system is primitive and our associates are overworked, "said Ellison. "These distractions prevent our employees from spending enough time with the customer to provide assistance."

Lily: Red Tuesday for retailers as TARGET shares suffer the widest since the financial crisis

Customer service is also affected by complications related to the project specialist and installation.

Lowe's

LOW, -5.56%

Shares fell 5% on Tuesday after the company announced a 1.5% growth in its store sales, which is below the FactSet consensus, with growth of 2.8%.

Optimistically, Ellison said the company planned to address these issues.

He is not the only one to be optimistic.

"While the disappointing third quarter results confirm that there are still significant problems, we are still encouraged by the fact that the new management is setting the stage for a multi-year recovery," wrote Wells Fargo analysts led by Zachary Fadem. "So we reduce our price target to $ 105 [from $125] accordingly, but continue to view Lowe as one of the most compelling opportunities for retail turnaround and see the potential for improvement as quickly as in fiscal year 19. "

Wells Fargo estimates that Lowe's shares outperform.

See: Targeted actions lose after investments weigh on margins

Lowe's also announced that it will exit the Mexican market, its procurement department, Alacrity Renovation Services, and the Iris Smart Home business in the United States.

This after the company announced that it would close dozens of underperforming stores, including 20 in the United States.

Do not miss: The last closures of Lowe's stores are not the first in Marvin Ellison's brief term as CEO, and may not be the last.

"While these actions reflect a significant number of portfolio changes in a short period of time, they correspond directly (at least in our opinion) to the desire of the new CEO, Marvin Ellison, to focus more on his core business of home renovation and renovation. to improve its profitability (which is well below its main competitor), "wrote Raymond James analysts in a note.

The main competitor of Lowe is Home Depot Inc.

HIGH DEFINITION, -2.49%

, which recorded a turnover of $ 26.3 billion in the third quarter and a same store sales growth of 4.8%.

Raymond James notes the outperformance of Lowe's shares.

Lowe shares fell 5.8% on Tuesday and fell 7.4% for the year, while the S & P 500 index

SPX, -2.06%

is down 1.2% for the period.