Home improvement retailer Lowe's Cos. Inc. (NYSE:LOW) said it will close 20 of its U.S. locations and slash 1,950 jobs in a bid to cut costs and improve profitability.
The chain, which has roughly 1,700 stores in the U.S., said it already shut down 10 stores on Sunday and will close an additional 10 within the next month.
As of 2:15 p.m. EDT, Lowe’s shares rose 18 cents, to $20.97.
As of January, the company had 161,000 full-time and 73,000 part-time workers.
In addition, Lowe’s has scaled back its expansion plans – instead of opening 30 new stores a year beginning in 2012, it plans to launch 10 to 15.
The company said that costs related to the store closings will total between $100 million and $130 million, and it expects to record related charges in the current and next quarters.
Earnings will be cut by 17 cents to 20 cents per share, the company estimated.
Lowe’s chief executive officer Robert Niblock said the company has to make tough decisions to improve profitability.
David Strasser, retailer analyst at Janney Capital Markets, wrote in a research note: This continues [Lowe's] progress toward becoming a more efficient operator. Management is making significant changes that should improve returns.
Indeed, Reuters noted that rival retailers like Gap Inc. (NYSE:GPS) and Saks Inc. (NYSE:SKS) have already closed store locations amidst weak consumer demand.