Lowe’s Cos Inc said on November 20, 2018 that it is considering selling or otherwise exiting its retail operations in Mexico, while also pulling back from several non-core U.S. businesses as the home improvement chain tries to close the gap with Home Depot.
The Mooresville, North Carolina-based retailer also said it was “exiting” its U.S. contracting services unit Alacrity Renovation Services and its security and smart home app Iris Smart Home. The company said it is reviewing all options for its 13 stores in Mexico.
Shares fell 5.3 percent to $86.50 in premarket trading after Lowe’s reported a smaller-than-expected increase in same-store sales. The market reaction came as the company continued a wider effort under newly appointed chief executive Marvin Ellison to simplify operations and focus on core retail.
Ellison has already overseen a series of cuts, including the closure earlier in November 2018 of 51 underperforming stores in the United States and Canada. That move followed the shutdown of 99 Orchard Supply stores in California.
“With our strategic reassessment substantially completed, we can now intensify our focus on the core retail business,” Ellison said in a statement. “Our transformation will take time.”
The company said net earnings fell to $629 million, or 78 cents per share, in the third quarter ended Nov. 2 from $872 million, or $1.05 per share, a year earlier. Results included $280 million in pretax charges.
Comparable sales rose 1.5 percent in the third quarter, below the 2.93 percent increase expected by analysts in IBES data from Refinitiv. Ellison said the weak performance reflected problems with merchandise assortment and the company’s inability to restock shelves with the right inventory.
Lowe’s also trimmed its full-year outlook. It now expects sales growth of about 4 percent, down from 4.5 percent, and comparable sales growth of about 2.5 percent, compared with the earlier estimate of 3 percent.
Excluding certain items, the company earned $1.04 per share, ahead of the 98-cent estimate. Net sales rose nearly 4 percent to $17.42 billion, slightly above the $17.36 billion forecast.
