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Lowe’s is looking to simplify. The home improvement retailer last week disclosed that it has entered into a definitive agreement to sell its Canadian operations to the private equity firm Sycamore Partners for $400 million in cash and future performance-based considerations.
The retailer operates stores in Canada under its namesake banner as well as RONA, Réno-Dépôt and Dick's Lumber. It serves roughly 450 corporate and independent affiliate locations in the country. The deal with Sycamore Partners is expected to close early next year.
"The sale of our Canadian retail business is an important step toward simplifying the Lowe's business model,” Marvin Ellison, Lowe's chairman, president and CEO, said in a statement. “While this business represents approximately seven percent of our full year 2022 sales outlook, it also represents approximately 60 basis points of dilution on our full year 2022 operating margin outlook."
Mr. Ellison expressed confidence in the short- and long-term outlook for Lowe’s U.S. business. He pointed to “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” as a partial basis for his optimism.
Lowe’s CEO said the deal with Sycamore would “intensify” the retailer’s focus on improving its operating margin and return on investment capital. He said that it would also strengthen Lowe’s ability to gain market share in the U.S. and create greater shareholder value.
The home improvement retailer reported second quarter sales of $27.5 billion, down slightly from 27.6 billion for the same period in 2021. U.S. same store sales were up 0.2 percent during the quarter. Net income for the retailer was $3 billion, in line with its performance the year before.
The home improvement retailer in September parted ways with chief brand and marketing officer Marisa Thalberg as part of a corporate reorganization. Lowe’s did away with Ms. Thalberg’s role and brought its marketing team under Bill Boltz, executive vice president of merchandising. Jen Wilson, senior VP, brand and customer marketing was promoted to senior VP, enterprise brand and marketing, reporting directly to Mr. Boltz.
Mike Shady, senior vice president of online, who previously reported to Mr. Boltz, now reports to Seemantini Godbole, Lowe’s chief digital and information officer.