Lowe’s announced Wednesday it will shutter all its Orchard Supply Hardware stores nationwide despite reporting higher sales and profits in its latest quarter.
The retail giant said the closure of all 99 locations will be completed by Feb. 1, 2019, and the move will better help the retailer focus on its core business, which is home improvement. Shares for the company rose nearly 8 percent on the news.
|LOW||LOWE'S COS., INC.||231.77||+0.70||+0.30%|
"While it was a necessary business decision to exit Orchard Supply Hardware, decisions that impact our people are never easy. We will be providing outplacement services for impacted associates, and they will be given priority status if they choose to apply for other Lowe's positions," Lowe's CEO Marvin Ellison said in a written statement.
Lowe’s paid $205 million for the hardware chain, which has stores in California, Oregon and Florida, in 2013 after it filed for bankruptcy. The chain’s previous owner was Sears Holding.
Employees at Orchard were told about the decision Tuesday, however, all stores will be open Wednesday for normal business hours but closing sales are expected to begin as early as Thursday, according to USA Today.
A Lowe’s spokesperson told FOX Business that the company is “working hard to make this transition as smooth as possible for our associates and our customers and we will be retaining our associates through the store closure process andare encouraging them to apply for open roles at Lowe’s stores, where they will receive priority status."
Additionally, Lowe’s said it will also close a distribution center in Tracy, California.
The decision comes as the home improvement retailer took a $230 million non-cash pre-tax charge during the second quarter based on its “strategic reassessment” of Orchard Supply Hardware and lowered its full-year sales forecast to 4.5 percent, down from the previous forecast of 5 percent.
Lowe’s posted second-quarter sales of $20.9 billion, up 7 percent from the same period a year ago, surpassing expectations of $20.8 billion, based on analysts polled by S&P Global Market Intelligence. However, net income fell 7 percent to $1.52 billion, missing expectation of $1.65 billion.
Also on Wednesday, Lowe’s announced it has appointed CVS Chief Financial Officer David Denton as its new finance chief. That decision follows the recruitment of former J.C. Penney Company Chairman and CEO Marvin Ellison, who was named the president and CEO of Lowe’s in May. Ellison also previously led Home Depot for a dozen years. He replaced former CEO Robert Niblock, who announced his retirement in March.