Lowe’s to pull the plug on Orchard Supply Hardware
In a surprising move, Lowe’s Cos. will shutter its Orchard Supply Hardware division — closing all 99 stores — in order to focus on its core home improvement warehouse model.
The 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 it to the decision.
The Orchard Supply stores, which are located mainly in California, but also in Oregon and Florida, will close by Feb. 1. In addition, Lowe’s will also close the distribution facility that services those stores. The company partnered with Hilco Merchant Services to manage the store closing sales.
The decision to shutter Orchard marks another bold move by new CEO Marvin Ellison, who shook up the corporate ranks earlier 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 shutting down Orchard, Lowe’s is developing plans to aggressively rationalize store inventory and reduce lower-performing inventory while investing in increased depth of high velocity items, Ellison said.
“Our strategic reassessment is ongoing as we evaluate the productivity of our real estate portfolio and non-retail business investments,” he said.
Orchard Supply has deep California roots and in recent years sought to find a niche between the corner hardware store and the giant warehouse format with a mid-size model (35,000 sq. ft. more or less) and upscale merchandising techniques. The retailer emphasized three key home improvement areas: backyard, paint and home repair.
Orchard Supply, which dates back to 1931 when formed as a farmers co-op, was purchased out of bankruptcy by Lowe’s. Prior to Lowe’s involvement, Orchard was part of Sears Holdings and led by Rob Lynch (who later became CEO of Lumber Liquidators), and then Mark Baker, a former Home Depot executive.
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