It was announced Wednesday that all Orchard Supply Hardware stores would be shutting down by the end of the year.
The news came after Lowe’s Companies, Inc. (NYSE: LOW) reported net earnings of $1.5 billion and diluted earnings per share of $1.86 for the quarter ended Aug. 3, 2018, which included non-cash pre-tax charges of $230 million further described below, compared to net earnings of $1.4 billion and diluted earnings per share of $1.68 in the second quarter of 2017.
Orchard Supply Hardware was founded in San Jose in 1931. All 99 stores located in California, Oregon and Florida:
The $230 million non-cash pre-tax charges referenced above resulted from the company’s strategic reassessment of Orchard Supply Hardware, which led to long-lived asset impairments and discontinued projects during the second quarter and a decision by the company on Aug. 17, 2018, to exit these operations in order to focus on its core home improvement business. The company expects to close all 99 Orchard Supply Hardware stores, which are located in California, Oregon and Florida, as well as the distribution facility that services those stores by the end of fiscal 2018. To facilitate an orderly wind-down, the company intends to conduct store closing sales and has partnered with Hilco Merchant Services to help manage the process and ensure a seamless experience for customers. Additional pre-tax costs of $390 to $475 million related to lease obligations, accelerated depreciation and amortization, and severance obligations are expected to be incurred in the second half of fiscal 2018, and have been reflected in the company’s updated business outlook.
Marvin R. Ellison, Lowe’s president and CEO said:
“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,” Ellison added.
“In addition to the decision to exit Orchard Supply Hardware, we are developing plans to aggressively rationalize store inventory, reducing lower-performing inventory while investing in increased depth of high velocity items. Exiting Orchard Supply Hardware and rationalizing inventory are the driving force behind the changes to Lowe’s Business Outlook.” Ellison continued. “Our strategic reassessment is ongoing as we evaluate the productivity of our real estate portfolio and non-retail business investments. We will update you on the changes to our strategy at the upcoming analyst and investor conference in December.”
