Lowe's to close Orchard Supply

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Lowe's to close Orchard Supply

By Ken Clark - 08/24/2018
Mooresville, N.C.-based Lowe's plans to close all 99 Orchard Supply Hardware stores by the end of the year in order to focus on its core home improvement warehouse model.

The blockbuster move was announced Wednesday morning along with the company's second quarter earnings report. Lowe's said a strategic reassessment of the San Jose, Calif.-based hardware chain led to the decision on Aug. 17.

The company expects to close all 99 Orchard Supply Hardware stores, which are located mainly in California, but also in Oregon and Florida. It will also close the distribution facility that services those stores by the end of fiscal 2018. The company partnered with Hilco Merchant Services to manage the store closing sales.

Orchard Supply has deep California roots and in recent years sought to find a niche somewhere in the middle between the corner hardware store and the giant warehouse format. The company's  mid-size footprint measured about  35,000 sq. ft. more or less, and was filled with upscale merchandising techniques. The retailer emphasized three key home improvement areas: backyard, paint and home repair.

Orchard Supply Hardware dates back to 1931 when it was formed as a farmers co-op. It was purchased out of bankruptcy by Lowe's in September 2013. Initially, Lowe’s executive Richard Maltsbarger was installed as president. For a time, Lowe's allowed Orchard Supply to operate more-0r-less on its own, and it promoted Bob Tellier to run the business. He was replaced by Lowe's executive Lara Lee in December of 2016.

In 2015, Orchard Supply was recognized as the Golden Hammer retailer of the year by Home Channel News, the forerunner of HBSDealer, at the National Hardware Show. The brand generated a high-degree of interest in 2016 when it leap-frogged the continent to open its first store in Florida.

Prior to Lowe's involvement, Orchard was part of Sears Holdings and was led by Rob Lynch (who later became CEO of Lumber Liquidators), and then Mark Baker, a former Home Depot executive.

The move to eliminate Orchard marks another bold move by new Lowe's CEO Marvin Ellison, who shook up the corporate ranks this summer.

"While it was a necessary business decision to exit Orchard Supply Hardware, decisions that impact our people are never easy," Ellison said, in a statement. "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."

"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." Ellison continued.  "Our strategic reassessment is ongoing as we evaluate the productivity of our real estate portfolio and non-retail business investments."