Lowe’s to Shut Down 20 Stores (LOW)

Lowe’s Companies Inc. (NYSE: LOW), a home improvement retailer, is planning to close 20 of its home-improvement stores. The Mooresville, North Carolina-based company is also planning to reduce planned store openings. The planned move is expected to improve the retailer’s profitability.

The closing of the 20 home-improvement stores will affect 1,950 of the company’s employees. The company said that it will book a charge of $345 million to $415 million in its second quarter due to the costs related to the store closings.

Lowe’s is now expecting to open 10 to 15 stores a year in North America from next year onwards. This is down from the company’s previous expectation of around 30 stores a year. The company, however, will stick to its planned store openings for this year as it has already committed to the sites.

The retailer said that it shut down 10 of the planned 20 store closings on Sunday and will shut down the rest within a month. A spokeswoman for Lowe’s said that the stores have underperformed and the company has not seen progress required for them to reach profitability.

Commenting on the planned move, Robert Niblock, CEO of Lowe’s, said that the company has an obligation to make tough decisions when necessary to improve profitability and strengthen its financial position.

Lowe’s has been operating in what has been a challenging environment for retailers. Although the fears of a double dip recession in the U.S. have faded away, the economic recovery is still very fragile. Also, consumer confidence in the U.S. is still at a very low level, hurting retailers such as Lowe’s. In August, the company had slashed its full-year earnings outlook. The company has also introduced plans to restructure its store and merchandising organizations.

Lowe’s shares have reacted positively to the planned store closings. Despite a sharp decline in the broad market, Lowe’s shares are up 0.72% in trading today.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.