Lowe’s reported its second quarter earnings on Wednesday, beating expectations. But there is bad news for subsidiary Orchard Supply Hardware.
Lowe’s net income rose 7% to $1.52 billion in the second quarter, with the company earning $2.07 per share and net sales rising 7% to $20.89 billion. But the home improvement chain missed analyst estimates for same-store sales, rising 5.2%—just shy of the average 5.34% estimate.
With the news of struggling same-store sales, Lowe’s also announced that it would be shuttering all of the Orchard Supply Hardware stores by year’s end. Lowe’s had bought the chain in 2013, not long after it had filed for bankruptcy protection.
Lowe’s informed Orchard’s 4,000 employees on Tuesday that the stores would be closing permanently. Liquidations are reportedly scheduled to begin on Thursday. Lowe’s also said it would begin to “aggressively rationalize store inventory,” cutting back on slow-selling products.
Lowe’s also cut its full-year profit and sales forecasts. Continuing to trail behind Home Depot, Lowe’s put its sales forecasts at 4.5% growth for fiscal 2018 and sales for stores that have been open at least a year at 3%, below its earlier target. The full-year profit forecast was also trimmed 90 cents down to $4.50-$4.60 a share.
The news caused the company’s shares to drop nearly 3% to $97.03 in premarket trading on Wednesday.