Lowe’s Cos., the second-largest U.S. home-improvement retailer, will close 20 U.S. stores, affecting 1,950 workers, and plans to slow its North American expansion next year as it works to improve sales.
Half of the locations closed at the end of business yesterday, and the remaining 10 will be shut within about a month, Mooresville, North Carolina-based Lowe’s said today in a statement. The closings will reduce earnings by about 17 cents to 20 cents a share this fiscal year, the company said.
Chief Executive Officer Robert Niblock has streamlined operations this year and closed seven stores in August after sales at older outlets trailed Home Depot Inc. (HD) for the ninth straight quarter. Lowe’s cut its forecast for fiscal 2011 profit that same month, saying consumers were scaling back home- improvement projects.
“They’re taking a finer-tooth comb to operations and stores they’re going to open going forward, an acknowledgement that they’re a mature company in a mature industry,” David Strasser, an analyst at Janney Capital Markets in New York, said today by telephone. He rates Lowe’s shares “neutral.”
Lowe’s advanced 0.5 percent to $20.89 at the close in New York. The shares have declined 17 percent this year.
Lowe’s said today it has discontinued a number of planned new locations and now expects to open 10 to 15 outlets a year in North America starting in 2012, less than a previous plan of about 30 a year. The company said it is on track to open about 25 stores this year, as planned.
Store closing costs, including leases, firing workers and adjusting inventories, will be $100 million to $130 million, according to a securities filing.
Employees at the stores to be closed, which are spread across 15 U.S. states, will receive pay and benefits for 60 to 90 days, the company said.
Lowe’s said Aug. 15 that per-share profit in the year through Feb. 3 would be $1.48 to $1.54. The planned closings weren’t included in that forecast, Lowe’s said today. The average of 22 analysts’ estimates compiled by Bloomberg is $1.59 a share.
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