It’s been a tough year for the retail industry. Department store chains Macy’s and J.C. Penney have both announced plans to close dozens of stores, and now home improvement retailer Lowe’s is following suit.
Lowe’s announced today that it is closing 50 underperforming stores in the U.S. and Canada. The move is expected to save the company $550 million, which it will invest in other areas of the business.
“We believe our people are our biggest competitive advantage, and this action will allow us to redeploy them to serve our customers better,” said Lowe’s CEO Robert Niblock in a statement.
The closings represent about 2% of Lowe’s total store count, but they come as the company has been struggling to keep up with its larger rival Home Depot. Lowe’s same-store sales have lagged behind Home Depot’s for the past four years, and its stock price is down about 20% since 2013 while Home Depot’s has soared.
It’s not clear yet which stores Lowe’s will be closing, but the company said it will provide more details when it reports earnings on November 20. In the meantime, employees at the affected stores will be notified and given the option to transfer to other locations.
Lowe’s isn’t the only retailer feeling pressure from Home Depot. Macy’s, J. Penney, Sears, and Kohl’s have all seen their sales decline as shoppers increasingly head to Home Depot and other big-box stores for their home improvement needs.
The trend has been especially pronounced in recent months as consumers spend more money on home improvements and repairs in the wake of hurricanes Harvey and Irma. Home Depot reported a 6% increase in same-store sales in its most recent quarter, while Lowe’s saw a 3% decline.
It’s no surprise then that Lowe’s is following Macy’s and J. Penney in announcing store closings. Like those companies, Lowe’s is trying to cut costs so it can invest in other areas of its business and compete more effectively against its larger rival.
Why is Lowe’s closing 50 stores?
It’s due to heavy competition fromHome Depot as well as department stores like Macy’s and JC Penny’s who are all struggling to keep up with customer demands. This move by Lowe’s is an attempt to save money so they can reinvest elsewhere and try to catch up to their opponents.