Mooresville-based Lowe is to end Mexico business

Mooresville-based Lowe reported better than expected earnings and sales for the third quarter on Tuesday. But the company said it would terminate its Mexico business as part of the ongoing effort to improve profitability.

Lowe's earnings for the quarter were $ 629 million, down from $ 872 million in the same quarter of 2017, mainly due to retail closure costs recently announced. Adjusted for non-recurring expenses, revenues were $ 1.04 per share. Analysts surveyed by Zack's Investment Research estimated 97 cents per share.

Sales for the quarter were $ 17.4 billion, an increase of 3.8 percent from a year ago and over $ 17.33 billion estimates from Wall Street analysts. Same store sales, an industry term that assesses the dealer's health and refers to sales in stores open at least one year, increased by 1[ads1].5 percent. The same store sales in the US increased by 2 per cent.

Lowe said there is exciting retail in Mexico, where it operates 13 stores, and explores a wide range of business options including sales, CEO Marvin Ellison said in a conversation with observer Tuesday. "Of course, if you sell the business, the new owner will decide what to do with these stores," said Ellison.

The company also said that it has identified "certain non-core businesses within its US corporate improvement business to terminate", including Alacrity Renovation Services and Iris Smart Home businesses.

Lowe's decision to terminate its Mexico business comes weeks after the company announced plans to close nearly 50 underperforming stores across the US and Canada by February 1st.

And this summer, Lowe said it would shut down its Orchard Supply Hardware chain, which the company bought in 2013 for $ 205 million to "focus on its core business." Lowe s is closing all 99 Orchard Supply stores – which are in California, Oregon and Florida – at the end of the year.

"Our highest priority in the third quarter was the positioning of Lowes for long-term success by identifying underperforming or non-core businesses and retail outlets," said Lowe's CEO Marvin Ellison in the statement. "With our strategic reassessment significantly completed, we can now intensify our focus on core business."

In pre-trading, Lowe's shares were down 2 percent at $ 91.35.

In a survey note Tuesday morning, Credit Suisse analyst Seth Sigman wrote that while encouraging Lowe to come out of his Mexico business, he is worried about potentially weakened demand in the home industry next year.

"The results seem weak and continue to undermine the growth of the category, although it is difficult to read much in this quarter, as this is clearly a transition period for the company as it gains its core business and focuses on driving higher productivity of its US home improvement business, "Sigman wrote.

Last year, Lowe's chief competitor, Atlanta-based Home Depot, reported better than expected earnings and sales, as customers continued to use housing projects. The same store sales increased by 4.8 per cent throughout the year.

Since the acquisition of Managing Director in July, Ellison has initiated significant changes for Lowes, including senior leadership.

For example, Lowe said at the beginning of July that several High Profile Profiles, including Chief Executive Officer and Chief Development Officer, will be eliminated and responsibilities previously in these jobs will be assumed by other senior executives who report directly to Ellison. Our transformation will take time, but we have it, but we have gathered an experienced team and developed a comprehensive plan to make steady progress, "Ellison said in the statement Tuesday.

Associated Press contributed. 19659017]

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