Many changes are coming to Lowe’s.
Today, the big-box retailer reported its second-quarter sales and earnings. The company also announced its decision to close all Orchard Supply Hardware stores, named its newest executive and revealed its strategic plans moving forward.
The company reported net earnings of $1.5 billion in the second quarter of 2018 compared to net earnings of $1.4 billion in the second quarter of 2017. Sales for the second quarter increased 7.1 percent to $20.9 billion over the second quarter of 2017. Comparable sales for the home improvement business increased 5.3 percent for the second quarter.
“We posted solid results this quarter by capitalizing on delayed spring demand,” Marvin R. Ellison, Lowe’s president and CEO, says. “We are committed to driving even stronger performance in the future by sharpening our focus on retail fundamentals and by limiting any projects and initiatives that take us away from our core mission of being a great omnichannel home improvement retailer.”
Changes Quickly Approaching
During the company’s conference call to discuss its financial results, Ellison discussed three companywide themes that stood out to him, which were resilience in the midst of a changing company; Lowe’s being a part of a great marketplace; and admitting there is a lot of work the company has to get done.
“We have a lot of opportunity in our company,” Ellison says during the press conference. “We are significantly behind in our supply chain strategy, our in-store technology is dated and our overall execution is impaired by complexity… We need to increase the rigor in which we evaluate capital investments.”
Ellison also commented on the company’s recent appointment of new Lowe’s executives, saying they will help the company correct its shortcomings.
He also noted the need for Lowe’s to simplify its business to produce better results rather than spending time on initiatives that are not core to the business, and cited the company’s decision to close all Orchard Supply Hardware locations as an example.
Ellison also stated the company would eliminate approximately $500 million in planned capital projects in 2018, terminating projects that are not focused on improving the core home improvement business.
Another plan intended to strengthen the company is to “rationalize” store inventory to remove clutter and reduce low-performing inventory. Ellison says Lowe’s now intends to focus on expanding the depth of the company’s top 2,000 high-velocity SKUs.
Welcoming a New Chief Financial Officer
The company also named its newest executive to join the Lowe’s team, announcing David Denton as executive vice president, chief financial officer. Denton currently serves as executive vice president and CFO of CVS Health and will join Lowe’s after the closing of CVS’s acquisition of Aetna, expected in the second half of 2018.
According to Lowe’s, Denton brings more than 25 years of finance and operational expertise to the company.
“We are pleased to add a leader of Dave’s caliber to the Lowe’s team,” says Ellison. “Dave is a proven retail executive with expertise in finance, capital allocation and strategic planning. Dave also has a strong background in large-scale transformation efforts and has achieved outstanding results throughout his tenure. I am confident that Dave will play a key role as we accelerate growth, profitability and return on capital at Lowe’s.”
Denton will succeed Marshall A. Croom, who announced plans to retire from the company by October 5.
As of Aug. 3, Lowe’s operates 2,155 home improvement and hardware stores in the United States, Canada and Mexico, representing 215.3 million square feet of retail selling space.