Lowe’s To Sell Canadian Operations For US$400 Million
Lowe’s Companies (NYSE: LOW) this evening announced it will be taking a major loss on its Canadian retail operations. The firm has agreed to sell the Canadian assets for $400 million in cash to that of Sycamore Partners.
The purchaser, Sycamore, is a private equity firm said to specialize in retail, consumer, and distribution-related investments. The group, founded in 2011, is said to have assets of roughly $10 billion.
“The sale of our Canadian retail business is an important step toward simplifying the Lowe’s business model. While this business represents approximately 7% of our full year 2022 sales outlook, it also represents approximately 60 basis points of dilution on our full year 2022 operating margin outlook,” said Lowe’s Chairman Marvin R Ellison on the sale.
Lowe’s Canadian operations, at 7% of the 2022 sales outlook, are expected to amount to US$6.79 – US$6.93 billion.
The firms Canadian operations currently consist of 450 corporate and affiliated retail locations, which operate under the Lowe’s, RONA, Dick’s Lumber, and Reno-Depot banners across the country. The operation is presently based out of Boucherville, Quebec.
Consideration for the sale is said to consist of $400 million, which is to be paid in cash, as well as undisclosed performance-based deferred consideration. Lowe’s is expected to take a $2.0 billion impairment charge in the third quarter of 2022 as a result of the sale.
The sale of Lowe’s Canadian operations follows the company focusing on expanding the business in 2016, when it acquired RONA in a transaction valued at US$2.4 billion, which at the time brought the firms locations north of the border to 539. Store closures began two years later in 2018 however, which continued through to 2019 as a result of “underperformance.”
The transaction is expected to close in early 2023.
Lowe’s last traded at $179.82 on the NYSE.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
