Lowe’s to ditch Mexico stores in further streamlining
By Aishwarya Venugopal - Nov 21st 2018, 11:23
Lowe’s stated it was looking to shed its retail operations in Mexico and certain noncore US businesses as the country’s second-biggest home improvement chain strives to compete with rivals including Home Depot.
The share price of the company based in Mooresville, North Carolina, fell 5.3% to $86.50 in premarket trading after Lowe’s also reported a smaller-than-expected rise in same-store sales.
Under Marvin Ellison, Lowe’s new CEO, the company has been streamlining its business by shutting underperforming stores and cutting back on slow-moving inventory.
The company has perennially lagged Home Depot in same-store sales, despite having about the same number of stores.
Lowe’s said it was looking at all options for its chain of 13 stores in Mexico and that it was “exiting” its US contracting services business Alacrity Renovation Services and security and smart home app Iris Smart Home.
Earlier in November, Lowe’s announced the closure of 51 underperforming stores in the US and Canada, which followed the shutdown of 99 Orchard Supply stores in California.
“With our strategic reassessment substantially completed, we can now intensify our focus on the core retail business,” said Ellison. "Our transformation will take time.”
Lowe’s net earnings fell to $629m, or 78c per share, in the third quarter ended November 2 from $872m, or $1.05 per share, a year earlier.
The company’s results included $280m in pretax charges.
Sales at stores open for more than a year rose 1.5% in the third quarter, versus expectations of a 2.93% increase, according to IBES data from Refinitiv.
Ellison blamed the assortment of merchandise at stores and the inability to restock shelves with the right kind of inventory for poor sales.
The company cut its forecast for full-year sales growth to about 4% from 4.5% and says it expects comparable sales to rise about 2.5%, compared with 3% estimated previously.
Excluding certain items, Lowe’s earned $1.04 per share, beating estimates of 98c. While, net sales rose nearly 4% to $17.42bn, edging past expectations of $17.36bn.Business Live
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