Lowe’s Companies is planning to close its stores in Mexico to focus on its core retail business amid a lower-than-expected quarterly sales increase.
As Reuters reports, under newly-appointed CEO Marvin Ellison, Lowe’s “has been streamlining its business by shutting underperforming stores and cutting back on slow moving inventory.”
In the latest move, the company announced it intends to exit its chain of 13 stores in Mexico and “has also identified certain non-core activities within its U.S. home improvement business to exit, including Alacrity Renovation Services and Iris Smart Home.”
“Our top priority in the third quarter was positioning Lowe’s for long-term success by identifying underperforming or non-core businesses and stores for divestiture,” Ellison said in a news release. “With our strategic reassessment substantially completed, we can now intensify our focus on the core retail business.”
The announcement came as Lowe’s reported a 1.5% increase in same-store sales for the third quarter, well below analysts’ expectations of a 2.93% gain.
Lowe’s earned an adjusted $1.04 per share as net sales rose nearly 4% to $17.42 billion, beating estimates of earnings of 98 cents per share on revenue of $17.36 billion. But the company cut its forecast for full-year sales growth to about 4% from 4.5% and comparable sales growth to about 2.5% from 3%.
Ellison cited “continued challenges with inventory out of stocks, poor reset execution, and assortment concerns in certain categories” for Lowe’s failure to sell more in the quarter.
“Our transformation will take time, but we have assembled an experienced team and developed a comprehensive plan to make steady progress,” he added.
But Neil Saunders, managing director of GlobalData Retail, said deeper issues like lackluster omnichannel services, as well as its relatively poor ”brand image and status in the marketplace,” affected Lowe’s results.
“On the brand front, Lowe’s still has to address its status as a second-fiddle retailer,” he told Retail Dive. “On all metrics — brand recognition, visitation, satisfaction, range depth, professional customer numbers, and so on — Home Depot is way ahead.”
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