Lowes closing 51 locations across the US and Canada

Lowe\s closing 51 locations across the US and Canada
Rona pays the price — 31 stores — after rebuilding with Lowes
A Rona store is seen Monday, November 5, 2018 in St. Eustache, Que. (THE CANADIAN PRESS/Ryan Remiorz)

BOUCHERVILLE, Que. — Lowes Companies Inc. says it plans to close 31 Canadian stores and other locations as part of a plan to focus on its most profitable operations.

The union representing Atlantic Canada workers said in a statement, "We are shocked by this news and we are equally shocked at the insensitive and disrespectful manner in which these employees were told this news. Meetings were called on Sunday afternoon and Sunday evening hundreds of employees were handed severance letters."

The home improvement company said Monday in addition to closing 27 stores, it will also shutter two regional support centres in Mississauga, Ont. and St. Johns, N.L., a truss plant in St. Johns, N.L. and a block plant in Kamloops, B.C. as part of a plan to focus instead on the most profitable parts of its business.

Retail analyst Bruce Winder, co-founder of the Retail Advisors Network, said he's surprised it took Lowe's this long to close some of the underperforming stores it acquired in 2016 and consolidate its Canadian presence as much as possible under the Lowe's name.

Among the 27 stores set to close by the end of January are nine in Ontario, nine in Quebec, six in Newfoundland and Labrador, two in Alberta and one in British Columbia.

Home improvement retailer Lowe's is closing 31 locations in Canada, including 27 underperforming Lowe's and Rona stores in British Columbia, Alberta, Ontario, Quebec and Newfoundland and Labrador, along with 20 Lowe's locations in the United States

Sylvain Prudhomme, chief executive of Lowes Canada, did not say how many employees would be affected by the closures, but said the changes will allow the company to improve collaboration between its banners to better serve customers.

"The decision to close stores is never one that we make lightly. However, following a detailed business review, we believe that this is the right path for the organization's future," Lowe's Canada's president Sylvain Prud'homme said.

"Everything will be done to ensure a smooth transition until the stores are closed, and Lowes Canada will support impacted employees, including by transferring eligible employees to other locations within our network whenever possible," Prudhomme said in a statement.

The company says most employees at U.S. locations being shut down will be offered a job at a nearby store, but the company has made no such guarantee for Canadian workers — who currently number more than 28,000 people across all of Lowe's brands in Canada.

In addition to the 31 locations the brand is closing in Canada, it will also axe 20 stores in the U.S.

The Canadian closures amount to a reduction of about three per cent of the brands total retail network square footage.

Across all of its brands, Lowe's currently has 2,390 stores across North America, including 630 in Canada. Other Lowe's-owned brands include Dick's Lumber, Contractor First and Ace Hardware.

The company currently has 68 Lowes and 430 Rona stores in the country — part of its network of 2,390 home improvement locations across North America, including Reno-Depot, Dicks Lumber, Contractor First and Ace locations it also owns.

"Everything will be done to ensure a smooth transition until the stores are closed, and all impacted employees will be supported by our HR team," Lowe's Canada told CBC News in a statement.

Lowes Canadian business is based in Boucherville, Que. and has more than 630 corporate and independent affiliate dealer stores.

David Soberman, a University of Toronto professor specializing in marketing and retail, said Lowes 2016 acquisition of Rona Inc. in a deal valued at $3.2 billion. has likely fuelled some of the Canadian cuts.

Only two of the closing locations are currently branded as Lowe's, and both are in Ontario. One in Calgary is a Reno-Depot. The rest are Ronas, the Quebec chain that Lowe's bought in 2016.

"They probably had too many locations," he said. "Now, this will mean people will have to drive a bit further to find a Lowes or a Rona store."

The chain is also closing 20 Lowe's locations across the U.S. immediately. The Canadian locations will stay open for a bit longer, before being shuttered for good by the end of February 2019.

He said the company has also been facing fierce competition from fellow home improvement businesses Home Depot Inc. and Canadian Tire Inc. and to some extent, Costco Wholesale Corp. and Walmart Inc., which are "extremely powerful" and stock some home and garden products.

Winder says Lowe's is facing a formidable challenger in Home Depot, which expanded to Canada first and as such got a real head start in winning over contractors who remain loyal to it.

E-commerce giants including Amazon Inc. have also posed a threat because of their efficiency, but Soberman said their impact on Lowes is limited because many construction and do-it-yourself products are bulky, heavy and cost more to ship — "not things that are suited to online retail."

A Rona store is seen Monday, November 5, 2018 in St. Eustache, Que. (THE CANADIAN PRESS/Ryan Remiorz)

"They're cutting off the bottom rung of stores and hoping that customers in the area just go to a nearby store, and that way they can maintain their revenue," he says.

In this June 29, 2016, file photo, customers walk toward a Lowes store in Hialeah, Fla. (Alan Diaz / AP)

Lowe's bought rival Quebec chain Rona in 2016 in a $3.2-billion takeover, and soon began consolidating some of those locations into Lowe's stores to streamline operations.

Also, Lowes will close its regional support centres in Mississauga and Saint John and consolidate those activities in Boucherville.

Rona has paid for the price for a restructuring by American hardware giant Lowe’s, with 24 of the outlets operating under the Rona brand being shut down across Canada — nine of them in Quebec.

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In total, 31 stores owned by Lowe’s — 27 of them deemed to be “underperforming” — will be shut down in Canada by the end of January. Nine of the stores are in Quebec, nine in Ontario, six in Newfoundland and Labrador, two in Alberta and one in British Columbia.

Also, Lowe’s Canada, with a head office in Boucherville, will close its regional support centres in Mississauga, Ont., and Saint John, N.L., and consolidate those activities in the Montreal suburb.

Most of the stores Lowe's is closing have other locations nearby, which is no accident, Winder said.

“The decision to close stores is never taken lightly,” Lowe’s head of Canadian operations Sylvain Prud’homme said in a statement Monday. “After a detailed examination of our activities, we believe this is the best course to take for the future of our organization.”

Prud’homme was not available for interviews. Meanwhile, 20 Lowe’s store in the United States will also be closed down.

As early as last May in a speech to the Canadian Club of Montreal, Prud’homme said the $3.2 billion acquisition of Rona by Lowe’s in 2016 was “supported by a scenario of growth and not of synergy.”

The announcement of the shutdowns was made in English at 7 a.m. on Lowe’s U.S. website. Details in French were available two hours later.

Lowe’s Canada spokesperson Valérie Gonzalo said the company wanted to personally inform its workers at its Mississauga centre before publishing the statement.

The Canadian subsidiary of the North Carolina-based hardware giant did not specify how many Canadians will lose their jobs because of the shutdowns, saying only that some workers could be transferred within the corporation.

In Quebec, the stores slated for shutdown do not have unionized employees. The Syndicat des Travailleurs unis de l’alimentation et du commerce (TUAC), says its represents 3,000-3,200 Rona employees in Quebec.