Lowe's Lays Off Thousands of Store Workers--4thUpdate

By Sarah Nassauer 

Lowe's Cos. told thousands of store workers this week their jobs were being eliminated as the company outsourced tasks such as assembling barbecue grills and janitorial services.

The home-improvement chain notified maintenance staff and assemblers that put together grills, wheelbarrows and other products that they were being laid off, according to the company and employees. Those roles will be taken over by third-party companies.

Each of Lowe's roughly 1,800 U.S. stores has several staff members doing these jobs. Laid off employees, even full-time staff with years of service, aren't being paid severance. Instead they are being offered "transition pay" totaling up to about two weeks for full-time workers, one employee said. All workers are able to reapply for open positions with the company, employees said, but aren't guaranteed the same hourly pay.

Lowe's employed 190,000 full-time and 110,000 part-time workers as of Feb. 1.

"We are moving to third-party assemblers and facility services to allow Lowe's store associates to spend more time on the sales floor serving customers," said a spokeswoman for Lowe's.

The move is a sign that new CEO Marvin Ellison plans to continue to cut costs aggressively to improve profits at the chain. Earlier this year, the company lowered its profit targets for the year.

Traditional retailers are scrutinizing their labor costs as they face increasing competition and adapt to consumers making more of their purchases online. Retailers from Walmart Inc. to the smallest shops are under pressure as they increase starting hourly wages to attract workers in a tight U.S. job market. Walmart is testing a new store management structure that will thin middle-manager ranks. Lowe's and rival Home Depot Inc. have added self-checkout counters to free workers for other roles.

Mr. Ellison -- previously a senior executive for Home Depot and most recently CEO of struggling department store J.C. Penney Co. -- took over at Lowe's last summer and moved quickly to shuffle executive ranks, often giving top jobs to former colleagues from Home Depot. He closed 47 less-profitable U.S. and Canadian stores last year and shut down Orchard Supply Hardware stores, a small regional hardware chain that Lowe's acquired five years previously.

In recent years, Lowe's sales growth has lagged behind rival Home Depot. Investors largely cheered Mr. Ellison's arrival at Lowe's as an opportunity to boost performance. In the most recent quarter, Lowe's sales growth outpaced Home Depot for the first time since 2016. But profit margins declined more than expected and Lowe's cut its profit expectations for the year, leading to a 12% drop in the company's stock that day.

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

August 01, 2019 18:07 ET (22:07 GMT)

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