Lowe's Scales Back Ambitions

Home improvement company Lowe's Companies, Inc. announced Wednesday that its pace of expansion into new stores in North America will slow by up to half and also announced the closure of 10 additional stores in the next month due to underperformance, a move that was unforeseen in the company’s previous stock price prediction.

The company detailed the impact of the closures both on the employees who would lose jobs and on the company’s stock price, which will decline more than expected in the year’s fiscal 2011 outlook.

The announcement follows the closure of 10 other stores on October 16. The rest of the locations will close in about one month after the inventory is sold. Employees will receive pay and benefits for 60 to 90 days and will work with government officials to help with finding new jobs.

There will be a total of 1,950 los jobs lost at the 20 stores in 15 states.

Among the states hardest hit will be New Hampshire, with three closings. California, Illinois, and Maine will see two store closures.

"Closing stores is never easy, given the impact on hard-working employees and local communities," said Robert A. Niblock, chairman, president and CEO. "However, we have an obligation to make tough decisions when necessary to improve profitability and strengthen our financial position.

The average age of the stores shutting down is four years. Ten opened after 2007, 8 opened between 2006 and 2007, and 2 opened before 2006.

Slowing Expansion

The company, which currently has 1,725 stores in the U.S., Canada and Mexico, will also slow its expansion plans in the U.S. by up to half. The company now expects to open 10 to 15 stores per year in North America from 2012 forward, compared with previous expectations of about 30 per year. The company is on track to open 25 stores in 2011.

The move is expected to have an impact on the company’s outlook for fiscal 2011 of $0.17 to $0.20 per diluted share.

"Closing stores is never easy, given the impact on hard-working employees and local communities," said Robert A. Niblock, chairman, president and CEO. "However, we have an obligation to make tough decisions when necessary to improve profitability and strengthen our financial position.

In fiscal 2010, the company had sales of $48.8 billion.

Stores Affected

Stores in the following locations are among the 20.