Lowe’s is continuing to undergo cost cutting moves under new CEO Marvin Ellison as it positions itself to focus on its core home improvement business.
The retailer reported net earnings of $629 million and diluted earnings per share of $0.78 for the third quarter ended November 2, 2018, which included pre-tax charges of $280 million, compared to net earnings of $872 million and diluted earnings per share of $1.05 in the third quarter of 2017.
The company noted that management has substantially completed its strategic reassessment of the business and identified actions to drive focus on its core home improvement business and improve profitability. However, the company said it intends to exit its Mexico retail operations and is “exploring strategic alternatives.” The company has also identified certain non-core activities within its U.S. home improvement business to exit, including Alacrity Renovation Services and Iris Smart Home.
These actions are in addition to the previously announced decisions to exit its Orchard Supply Hardware operations, and close 20 underperforming stores in the U.S. and 31 stores and other locations in Canada.
“Our top priority in the third quarter was positioning Lowe’s for long-term success by identifying underperforming or non-core businesses and stores for divestiture,” said Marvin Ellison, Lowe’s president and CEO. “With our strategic reassessment substantially completed, we can now intensify our focus on the core retail business.
Sales for the third quarter increased 3.8% to $17.4 billion over the third quarter of 2017, and comparable sales increased 1.5%. Comparable sales for the U.S. home improvement business increased 2% for the third quarter.
“During the quarter, the favorable macroeconomic environment, combined with great values, drove traffic to our stores and website,” added Ellison. “However, continued challenges with inventory out of stocks, poor reset execution, and assortment concerns in certain categories pressured our ability to turn those visits into transactions. Rather than chase short-term solutions to these problems, we are redesigning processes and systems to deliver sustainable improvement, and expect to see positive trends as we enter 2019.”