Lowe's is selling its Canadian retail business
Lowe’s agreed to sell its Canadian retail business to Sycamore Partners, a private equity firm specializing in retail, consumer and distribution-related investments, for $400 million in cash, and performance-based deferred consideration.
Based in Boucherville, Quebec, Lowe's Canadian retail business operates or services approximately 450 corporate and independent affiliate dealer stores in a number of complementary formats under different banners, which include RONA, Lowe's Canada, Réno-Dépôt and Dick's Lumber.
"The sale of our Canadian retail business is an important step toward simplifying the Lowe's business model. While this business represents approximately 7% of our full year 2022 sales outlook, it also represents approximately 60 basis points of dilution on our full year 2022 operating margin outlook," said Marvin R. Ellison, Lowe's chairman, president and CEO.
"We remain confident in our short and long-term outlook for the U.S. business, underscored by improved sales trends and strong profit flow-through in the third quarter, as well as our expectations for solid business performance for the remainder of 2022. By executing this transaction, we will intensify our focus on enhancing our operating margin and ROIC, taking market share in the U.S. and creating greater shareholder value," Ellison continued. "I want to thank our entire Canadian team for their hard work and dedication to our customers. We look forward to working with Sycamore Partners in executing a seamless transition."
Who is Sycamore Partners?
Based in New York City, Sycamore Partners is a private equity firm that specializes in retail, consumer and distribution-related investments.
Founded in 2011, Sycamore Partners has raised some $10 billion in aggregate committed capital since its inception. Its investments include Hot Topic, Belk, Dollar Express, Coldwater Creek and Staples.
"We are honored to partner with Lowe's to establish Lowe's Canada and RONA as a standalone company headquartered in Boucherville, Quebec," said Stefan Kaluzny, managing director of Sycamore Partners. "We look forward to working with the company's management team to build on its 83-year history as a leading Canadian home improvement business serving families, builders, and contractors in their communities across the country."
"We are excited to work with Sycamore Partners on this next chapter of growth for our business," said Tony Cioffi, president of Lowe's Canada. "Together, we will remain committed to supporting our associates, our Canadian- and Quebec-based vendors and our dealer network."
The transaction is expected to close in early 2023, subject to customary closing conditions and regulatory approvals. In connection with the preparation of the company's financial statements for the third quarter of 2022, the company expects to record a pre-tax non-cash impairment charge of approximately $2 billion related to its Canadian retail business.
