Lowe’s to Close 20 Underperforming Stores

October 17 00:00 2011

New York, October 17 (RainbowNewsLine.com) – Lowe’s has decided to close 20 underperforming stores in 15 states within a month in order to improve profitability and boost its financial position.

The home-improvement retailer is also planning to discontinue plans for several new stores. About 1,950 employees will be affected by the closings. The company will book a related second-quarter charge of 17 cents to 20 cents a share.

The company’s earlier plan to open about 30 stores a year has been toned down to about 10 to 15 stores a year in North America from 2012 onwards. In 2011, however, it will open about 25 stores. The full-year EPS forecast in August has been lowered by Lowe’s from $1.48 to $1.54 on a 2% sales growth.

Later in August, Moody’s Investors Service lowered its outlook on Lowe’s to negative from stable in view of its lowered earnings guidance and stiffer competition from its main rival Home Depot Inc. The second quarter earnings went down slightly 0.2% mainly because of the closing of some stores and less-than-expected sales. Lowe’s shares closed Friday at $20.79 and were inactive premarket. So far this year, the stock has gone down 17%.

Lowe’s has formulated plans to restructure its store and merchandizing operations into three regional divisions in order to achieve greater speed in delivery of new products and services to the market.