Lowe's to close 34 stores across six provinces, including 3 in Nova Scotia
Published Wednesday, November 20, 2019 10:11AM AST Last Updated Wednesday, November 20, 2019 9:09PM AST
Lowe's Companies Inc. said Wednesday it will close 34 "underperforming" stores across six provinces as part of a restructuring of its Canadian business, raising hackles in Quebec over the fate of local hardware mainstay Rona.
The stores include 26 Ronas, six Lowe's and two Reno-Depots spread from Prince George, B.C., to Dartmouth, N.S.
In Nova Scotia, the Rona stores on Windmill Road in Dartmouth, Cole Harbour Road in Dartmouth, and at the Bedford Place Mall in Bedford, are set to close in February.
"Closing underperforming stores is a necessary step in our plan to ensure the long-term stability and growth of our Canadian business," said Tony Cioffi, interim president of Lowe's Canada in a statement.
The home improvement retailer did not say how many staff would be affected by the latest round of closures, which will see stores close in January and February. The company says eligible employees will be offered jobs at nearby stores, according to the need for workers throughout its network.
More than one-third of the closures will be in Quebec, with Rona stores comprising 11 of the 12 shutdowns there.
Quebec Economy Minister Pierre Fitzgibbon suggested the province will not be able to intervene in the hope of saving jobs. Fitzgibbon said the U.S. giant seemed to respect an agreement signed with Ottawa after Lowe's acquired Rona for $3.2 billion in 2016.
He told reporters he could not divulge details of the deal, but aimed to call his federal counterpart after the new Trudeau cabinet was announced Wednesday afternoon.
Premier Francois Legault said that "it seems very nebulous what we can do...It's a private enterprise. What we can do is limited."
Lowe's made a half-dozen commitments in 2016 that involved jobs and the establishment of a Canadian head office for Lowe's in Boucherville, across the St. Lawrence River from Montreal and home of Rona, a now-80-year-old Quebec hardware institution.
Bloc Quebecois Leader Yves-Francois Blanchet on Wednesday denounced the closures and called on the federal government to disclose details of the 2016 pledges.
The closures add to the shuttering of 31 Canadian Lowe's and Rona locations, including 27 stores and four other facilities, announced in November last year. At the time the company also announced the closure of 20 stores in the U.S.
The Canadian division of Lowe's has more than 600 corporate and independent affiliate stores under the Lowe's, Rona, Reno-Depot, Ace and Dick's Lumber brands.
A "very complex business model" inhibited the retailer's ability to provide smooth service to customers up north, said chief executive Marvin Ellison.
"We're operating five banners, all with legacy systems, all with different back-end systems," Ellison said on a conference call with investors Wednesday. "It made it very difficult to create synergies from a marketing, merchandising, sourcing perspective and even in IT systems infrastructure."
The company plans to move its Canadian information technology platform to the U.S. "to eliminate inefficiencies and unnecessary technology duplication," he said.
The latest restructuring also includes investment in its supply chain capabilities, web platforms, and existing corporate stores and affiliated dealer network.
The North Carolina-based company has been undergoing a wider restructuring since Ellison stepped into the CEO role in July of last year.
Lowe's remains in the midst of a catch-up period against chief competitor Home Depot "after underperforming for several years," said Elizabeth Suzuki, an analyst at Bank of America Merrill Lynch.
Suzuki cited encouraging U.S. metrics such as sturdy household balance sheets, solid home sales "and economic drivers that are tied to renovation activity."
"Unlike Home Depot, which appears to be moving past its peak in comps and earnings growth, Lowe's still has a turnaround story that has yet to play out," she said in an investor note.
Driving the perky home-renovation sales trends are core maintenance and repair work in an aging U.S. housing market, "rather than the remodelling ups, downs and recovery processes that have characterized most of the last 15 years," said analyst Scot Ciccarelli of RBC Capital Markets.
Most of Lowe's recent success has come from increased purchases by existing shoppers, said Neil Saunders, managing director of research firm GlobalData Retail.
Better stock levels and product display have helped boost sales, Saunders said. Tactics like a permanently staffed "pro-desk" and dedicated parking spaces have helped the company build up its base of home renovation professionals to nearly one-quarter.
Lowe's could attract more "regular shoppers" by distinguishing itself from Home Depot, he added, stressing "the softer side of home improvement."
In Canada, Lowe's has more than 28,000 employees, while its independent affiliate dealers operating under the Rona and Ace name have another 5,000 employees. The store closures will take place in British Columbia, Alberta, Saskatchewan, Ontario, Quebec and Nova Scotia.
Ad Standards, the advertising industry's self-regulatory body, said earlier this month that the company should stop using the phrases "truly Canadian" and "proudly Canadian" on its store signs as they were misleading. The company said it "strongly disagrees" with the conclusion.
Lowe's third-quarter earnings of US$1.05 billion, or US$1.36 per share, beat the US$1.35 per share that analysts surveyed by Zacks Investment Research.
The company also boosted its full-year adjusted earnings outlook, in contrast to the larger Home Depot that missed analyst expectations and cut its full-year sales forecast Tuesday.
This report by The Canadian Press was first published on Nov. 20, 2019.
-- With files from the Associated Press