Orchard Supply Hardware to close in Visalia

Lowe’s offers employees priority status to apply for positions at sister company after OSH closing


MOORESVILLE, N.C. — The big box budget axe finally whacked Visalia.

On Aug. 22, Lowe’s Companies, Inc., the holding company for Orchard Supply Hardware, announced it will close all 99 OSH stores, which are located in California, Oregon and Florida, as well as the distribution facility that services those stores by the end of fiscal 2018. 

“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. Exiting Orchard Supply Hardware and rationalizing inventory are the driving force behind the changes to Lowe’s Business Outlook.” commented Marvin R. Ellison, Lowe’s new president and CEO. “Our strategic reassessment is ongoing as we evaluate the productivity of our real estate portfolio and non-retail business investments. We will update you on the changes to our strategy at the upcoming analyst and investor conference in December.”

The nearest stores are located in Visalia, Hanford and Fresno. Jackie Pardini Hartzell, director of public relations for Lowe’s said 86% of OSH stores are located within 10 miles of a Lowe’s, so OSH employees will be given priority status if they choose to apply for positions at Lowe’s stores nearby.  The OSH stores in Visalia, Hanford and Fresno are all located near a Lowe’s location.

“We are working hard to make this transition as smooth as possible for our associates and our customers,” said Jackie Pardini Hartzell, director of public relations for Lowe’s. “We will be retaining our associates through the store closure process and are encouraging them to apply for open roles at Lowe’s stores, where they will receive priority status. Associates will receive job placement assistance, and we will be providing eligibility for severance.”

The news comes five years after Lowe’s bought 72 OSH stores out of bankruptcy from Sears after its parent company, Sears Holding Corp., unsuccessfully tried to boost the OSH brand as an independent chain from Sears. OSH was established as a co-op of fruit growers in San Jose in 1931 when the Silicon Valley was filled with orchards. As Silicon Valley transformed into a tech capitol, Lowe’s became more of a hardware store for the suburbs. The chain prided itself on its hands-on, homeowner focused customer service, setting it apart from its more impersonal hardware retailers Lowe’s and Home Depot which catered to contractors. The chain was purchased by Sears in 1996.

The closure was announced as part of the Lowe’s second quarter sales and earnings results. In the same statement, Lowe’s reported second quarter sales increased 7.1 percent to $20.9 billion over the second quarter of 2017, and comparable sales increased 5.2 percent. Comparable sales for the U.S. home improvement business increased 5.3 percent for the second quarter. Net earnings of $1.5 billion and diluted earnings per share of $1.86 for the quarter ended Aug. 3, 2018, were also increases over last year, and an adjusted diluted earnings 31.8% higher than the second quarter of 2017. 

Lowe’s credited the decision to close the stores as a major factor in improving its balance sheet. Delivering on its commitment to return excess cash to shareholders, the company repurchased $1.1 billion of stock under its share repurchase program and paid $338 million in dividends in the second quarter.

“We posted solid results this quarter by capitalizing on delayed spring demand,” R. Ellison said. “We are committed to driving even stronger performance in the future by sharpening our focus on retail fundamentals and by limiting any projects and initiatives that take us away from our core mission of being a great omni-channel home improvement retailer. I would like to thank our associates for their hard work and commitment to the company.”

As of Aug. 3, Lowe’s (NYSE: LOW) operated 2,155 home improvement and hardware stores in the United States, Canada and Mexico representing 215.3 million square feet of retail selling space.

In addition to the decision to exit Orchard Supply Hardware, the company is developing plans to aggressively rationalize its store inventory, reducing lower-performing inventory while investing in increased depth of high velocity items. Potential impacts of these actions have been reflected in Lowe’s business outlook. To facilitate an orderly wind-down, the company intends to conduct store closing sales and has partnered with Hilco Merchant Services to help manage the process and ensure a seamless experience for customers. OSH locations are already offering in-store discounts of 10-30% storewide.

Up until last week, Visalia department stores had staved closures. On May 31, Sears Holding Corporation announced it would close 15 Kmart stores and 48 Sears stores nationwide as part of its ongoing efforts to “streamline the company’s operations and focus on our Best Stores.” Luckily, neither the Kmart nor Sears in Visalia made the list of the 100 lowest performing stores for the two retailers. The only California locations listed for closure include a Kmart in Ridgecrest and a Sears in the City of Industry. On Jan. 5, 2017, Sears announced the closing of 78 Kmart and 26 Sears locations nationwide in addition to the 30 Kmart and 16 Sears store closures announced on Dec. 27, 2016.

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