NEW YORK (Reuters) - Lowe’s Cos (LOW.N), the world’s second-largest home improvement chain, said on Monday that three senior executives had left the company as part of a management shake-up aimed at improving its U.S. operations.
The chain’s U.S. stores will now operate under three divisions — North, South and West. Previously, it had divided its largest market into at least five regions.
The news came just weeks after Lowe’s reported weaker-than-expected quarterly sales and cut its fiscal-year outlook for the second time in three months. Lowe’s has underperformed larger rival Home Depot Inc (HD.N) on the same-store sales front for nine straight quarters now.
“They are clearly taking cost out,” Bernstein analyst Colin McGranahan said. “They are moving to a smaller organization, which is probably more appropriate considering they are no longer growing at the rate they were when they created the organization.”
As part of the changes, Theresa Anderson and Robert Wagner, previously senior vice presidents of operations, and Patricia Price, previously senior vice president and general merchandising manager of its home decor unit, will leave the company.
“This is not about dollar savings. This is about getting the right structure in place to move forward,” Lowe’s spokeswoman Chris Ahearn said.
Eric Sowder, senior vice president and general merchandising manager, outdoor living, had announced in July plans to retire from Lowe’s on September 9. Ahearn said that Sowder’s retirement was not related to the reorganization.
Sales at home improvement chains have declined as a weak economy and high unemployment have led shoppers to avoid costly renovations.
Home Depot has gained from its recent efforts to improve distribution and customer service. It has been quicker to cut costs than Lowe’s, and in some cases benefited as housing markets improved in regions where it has a heavy presence.
Lowe’s new structure with three regional divisions is similar to those at big-box retailers such as Wal-Mart Stores Inc (WMT.N) and Home Depot, McGranahan said.
“Certainly, this is a structure that is tried and tested,” he said. McGranahan added: “They are trying to get some fresh perspective in the ranks too.”
The new structure will not change things in the short term but should help the company become more efficient down the road, he said.
On Monday, Lowe’s said it had also decided to consolidate its merchandising operations into two product units from four.
Lowe’s laid off about 1,700 middle managers across the United States in January as it faced the weak economy, soft housing market and stiff competition.
Lowe’s president and chief operating officer, Larry Stone, also retired on June 2 after 42 years with the company.
Shares of Lowe’s closed 1.2 percent higher at $20.49 on Monday.
Reporting by Dhanya Skariachan; Editing by Tim Dobbyn