Lowe’s Cos. announced Monday that CEO Robert Niblock will retire from the home improvement retailer as soon as the company finds a successor, sending its stock up 6 percent.
Lauren Thomas of CNBC.com had the news:
“After a 25-year career at Lowe’s, including 13 years as chairman and CEO, I am confident that it is the right time to transition the company to its next generation of leadership,” the 54-year-old Niblock said in a statement.
Lowe’s has increasingly lagged behind its biggest rival, Home Depot. In the most recent quarter, same-store sales climbed a little more than 4 percent at Lowe’s, while Home Depot reported an increase of 7.5 percent.
In January, activist investor D.E. Shaw & Co. built a stake in Lowe’s, saying the firm was concerned about the retailer’s performance relative to competitors.
The North Carolina-based retailer has since appointed new board members following talks with Shaw.
Katherine Peralta of The Charlotte Observer reported that the retailer has benefitted from the housing market:
In the past year, Lowe’s has been working to cut costs and boost earnings at a time when home improvement retailers are benefiting from a strong housing market.
Earlier this year, Lowe’s reported fourth-quarter earnings that fell below expectations, despite a rise in same-store sales, an industry term key to gauging a retailer’s health. “We are moving forward with urgency to improve our results,” Niblock said in a call with analysts at the time.
Last fall, hedge fund D.E. Shaw, a longtime Lowe’s shareholder, began building up an activist stake in the company, and now has an approximately $1 billion stake in the company. The firm has been pushing for changes at the retailer, and in January Lowe’s announced three new board members.
“We applaud Robert for his successful career with Lowe’s, which was dedicated to serving customers, empowering associates and delivering returns to shareholders,” said Quentin Koffey, a portfolio manager at D. E. Shaw, in an email Monday. “Robert leaves Lowe’s in excellent condition to execute on the tremendous value creation opportunities ahead of the company. We wish him well in his retirement.”
Phil Wahba of Fortune reports that Lowe’s still faces stiff competition from Home Depot:
Lowe’s touted the news as a succession announcement, but companies typically prefer to have a new CEO lined up, or at least have identified candidates for the role, before they announce a corner office change. Niblock, a 25-year veteran of Lowe’s, will stay on until the company finds a replacement. Lowe’s has recently faced pressure from activist investor D.E. Shaw & Co. to make greater strides in catching Home Depot and named new directors to its board in January.
While both Home Depot and Lowe’s have benefited enormously from the home improvement boom caused by increasing home values and the aging housing stock in the United States, Lowe’s has not been as adept at capitalizing on that. For years, Home Depot has clocked in better sales performances, thanks to better store locations, earlier investments in e-commerce and more nimbleness in updating its product assortment.
And Home Depot is not ready to cede any of its leadership. In addition to an aggressive move into appliances, an area where Lowe’s leads it, Home Depot is roughly doubling its capital spending in the next three fiscal years to some $11.1 billion on store remodeling and new tech to make store workers more productive and deepen their interaction with customers. (Last year, Home Depot’s online sales rose 21.5%) Niblock said in December that Lowe’s will increase its own capital spending to $3.6 billion from 2017 to 2019.)
