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Lowe’s to close Orchard Supply

Bold move by new executive team to get out of OSH and focus on core business.

BY Ken Clark

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.”

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J.Chakko says:
Aug-23-2018 01:19 pm

Having been in this business since the 1980's the writing was on the wall when Orchard Supply was swallowed up by the Corporate Publicly Traded Behemoths. When you try to build brands with "OPM" ( Other Peoples money...) YOU BETTER HAVE A LOT OF IT AND A CLEAR MARKETING PLAN! RIP ORCHARD SUPPLY... Say Hello to Builders Emporium, Angels, Ole''s, National Lumber, Payless Cashway and others!

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For HD, a rebound and a record Q2

The Home Depot reports a first-ever $30 billion quarter.

BY HBSDealer Staff

After early selling season weather disruptions, The Home Depot said it fully expected to rebound in the second quarter, and it did. In big way.

The Atlanta-based company reported domestic comparable store sales of positive 8.1%, the highest in more than two years. Its total company comps of 8.0% were the highest since the second quarter of 2015.

Home Depot reported total sales of $30.5 billion for the quarter, crossing the $30 billion mark for the first time in any three-month period. Sales increased 8.4% from the same quarter last year. Net earnings increased 31.2% to $3.5 billion.

“We were very pleased with our record second quarter sales and earnings. Not only did our seasonal business rebound from the first quarter, but our overall results exceeded our expectations,” said Craig Menear, chairman, CEO and president. “These results exemplify the outstanding execution of our combined team of store associates, merchants, suppliers and supply chain.”

Based on the strong second quarter results, the company raised its guidance on performance metrics. It now expects sales will grow 7.0% for the year, with comp-store sales of about 5.3%.

During the quarter, Home Depot increased its store count by one unit, to a total of 2,286 stores.

Big-box rival Lowe’s will report its second quarter results Aug. 22.

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Starts fall back to earth

BY HBSDealer Staff

After rising to an 11-year high in May, total housing starts sank 12.3% in June, and slipped 4.2% compared to June 2017.

The residential construction report from the Commerce Department released Wednesday morning estimated a seasonally adjusted annual rate of 1,173,000 housing starts for June. The figure surprised analysts who had forecast a rate of 1.32 million.

Single-family starts were only slightly less disappointing. The report estimated a single-family SAAR of 858,000, down 9.1% from the May figure of 944,000.

Statistics on building permits presented a glimmer of growth. Single-family authorizations in June were at a rate of 850,000, up 0.8% from the revised May figure of 843,000.

Regional breakdown:

Among the four regions in the U.S., the South fared the best. The South saw a 13.4% increase in year over year housing starts, and a 3.1% in single-family starts increase year-over-year.

The Midwest saw double-digit declines across the board. The rate of total housing starts in the Midwest declined 35.8% compared to May and declined 23.5% compared to June 2017.

See the Commerce Department report here.

The report comes as dealers and industry analysts point to the challenges of labor availability, rising prices of lumber and potential shortages in building materials.

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