(Reuters) – Lowe’s Cos Inc said on Tuesday it was looking to shed its retail operations in Mexico and certain non-core U.S. businesses as the country’s second-biggest home improvement chain strives to compete with rivals including Home Depot.
FILE PHOTO: An employee stands outside a Lowe’s home improvement chain in Austin, Texas, U.S., February 27, 2017. REUTERS/Mohammad Khursheed
Shares of the Mooresville, North Carolina-based company fell 5.3 percent to $86.50 in premarket trading after Lowe’s also reported a smaller-than-expected rise in same-store sales.
Under Marvin Ellison, Lowe’s newly-appointed chief executive officer, the company has been streamlining its business by shutting underperforming stores and cutting back on slow moving inventory.
The company has perennially lagged Home Depot Inc in same-store sales, despite having roughly the same number of stores.
Lowe’s said it was looking at all options for its chain of 13 stores in Mexico and that it was “exiting” its U.S. contracting services business Alacrity Renovation Services and security and smart home app Iris Smart Home.
Earlier this month, Lowe’s announced the closure of 51 underperforming stores in the United States and Canada, which 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.”
Lowe’s 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.
The company’s results included $280 million in pretax charges.
Sales at stores open for more than a year rose 1.5 percent in the third quarter, well below expectations of a 2.93 percent increase, according to IBES data from Refinitiv.
Ellison blamed the assortment of merchandise at stores and the inability to restock shelves with the right kind of inventory for poor sales.
The company cut its forecast for full-year sales growth to about 4 percent from 4.5 percent and expects comparable sales to rise about 2.5 percent, compared with 3 percent estimated previously.
Excluding certain items, Lowe’s earned $1.04 per share, beating estimates of 98 cents. While, net sales rose nearly 4 percent to $17.42 billion, edging past expectations of $17.36 billion.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Anil D’Silva