Lowes closing 51 locations across the US and Canada

Lowe\s closing 51 locations across the US and Canada
MAP: These are the Rona and Lowes stores closing by February
(Reuters) – Home improvement chain Lowes Companies Inc (NYSE:LOW – News) announced the closure of another 51 underperforming stores in the United States and Canada on Monday as it strives to compete with rival Home Depot Inc (NYSE:HD – News) in a slowing housing market.

Lowes gave no detail of job losses in the move, which closes stores in some upmarket areas including Broadway and Chelsea in Manhattan and follows the shutdown of 99 Orchard Supply stores in California.

Buffetted in recent quarters by the impact of a long winter in North America, Lowes has been striving to find ways to catch up with the long-time sector leader Home Depot, whose stores on average generate almost twice as much in sales.

The RONA store on Barrydowne Road in Greater Sudbury, and the Black Road Rona location in Sault Ste. Marie. as well as a relatively new Lowe's location in the Soo is set to close as the company focuses on its most profitable stores to improve the overall health of its store portfolio, it said in a news release.

There are also signs that Americans are spending less on housing as prices and demand peak after a seven-year homebuilding spree, although many of the factors underlying the industrys health remain in place.

To facilitate an orderly wind-down, the company said it intends to conduct store closing sales for most of the impacted locations with the exception of select stores in the U.S., which will close immediately.

“The decision was informed by the strategic reassessment work we have been doing over the last few months … We plan to continue to evaluate all businesses and elements of our portfolio annually,” the company told Reuters.

Lowe's opened its Soo location in 2015 after renovations were completed on the former Zellers spot. As recently as August, Lowe's held a job fair for the store.

While Lowes is far smaller and less exposed to the presence of Amazon and other online sellers, the closures follow a wave of similar moves by traditional U.S. retailers in the face of greater online competition.

New Chief Executive Officer Marvin Ellison began a restructuring after taking over in July and has said he was reviewing its real estate portfolio, promising to remove slow-selling products and end unsuccessful ventures.

The North Bay location at 523 McGaughey Ave. is not on the hit list nor is the Lakeview Rona on Memorial Drive.

Under Ellison, the company has also eliminated four senior positions, while creating two new senior roles for stores and supply chain.

“New blood in the upper ranks was clearly a catalyst for this decision, as we believe there is a greater willingness on behalf of the leadership team to examine the root causes of underperformance,” Jefferies analyst Jonathan Matuszewski, said in a note.

The wind down of the Orchard Supply chain cost the company between $390 million and $475 million in write-downs. Lowes said Mondays announcement would result in charges of 28 cents per share to 34 cents per share or $300 million to $365 million in pre-tax expenses.

The company, which operates about 1,800 U.S. stores and 300 in Canada, said it expects the closures to be completed by February, with the exception of some U.S. stores that are closing immediately.

The 20 U.S. closures are spread across states including New York, Texas and California, with 31 locations including two plants in a handful of Canadian provinces also shutting.

Thirty-one Rona and Lowes hardware stores are closing in 2019, the company announced Monday during a strategic reassessment.

The company named 27 affected stores are from New Westminster, B.C., Calgary, Alta., along with various locations in Ontario and Newfoundland. That amounts toto about three per cent of the companys Canadian footprint.

“The decision was informed by the strategic reassessment work we have been doing over the last few months. … We plan to continue to evaluate all businesses and elements of our portfolio annually,” the company told Reuters.

“Everything will be done to ensure a smooth transition until the stores are closed, and Lowe’s Canada will support impacted employees, including by transferring eligible employees to other locations within our network whenever possible,” said Sylvain Prud’homme, chief executive of Lowe’s Canada, in a statement.