Lowe’s to Sell its Canadian Retail Business
Home improvement retailer Lowe’s is selling its Canadian business to private equity firm Sycamore Partners.
“The sale of our Canadian retail business is an important step toward simplifying the Lowe’s business model,” says Marvin R. Ellison, chair, president and CEO of Lowe’s Companies Inc. “While this business represents approximately seven per cent of our full year 2022 sales outlook, it also represents approximately 60 basis points of dilution on our full year 2022 operating margin outlook.”
Lowe’s Canadian retail business operates or services approximately 450 corporate and independent affiliate dealer stores in a number of complementary formats under different banners, which include Lowe’s, Rona, Réno-Dépôt and Dick’s Lumber.
By executing this transaction, Ellison says Lowe’s will intensify its focus on enhancing its operating margin and return on invested capital, taking market share in the United States and creating greater shareholder value.
“We remain confident in our short and long-term outlook for the U.S. business, underscored by improved sales trends and strong profit flow-through in the third quarter, as well as our expectations for solid business performance for the remainder of 2022,” he says.
Based in New York, Sycamore Partners specializes in retail, consumer and distribution-related investments. The company owns a range of retailers, including Loft and Ann Taylor, Staples Canada, Stuart Weitzman and Nine West Holdings.
“We are honoured to partner with Lowe’s to establish Lowe’s Canada and Rona as a standalone company headquartered in Boucherville, Que.,” says Stefan Kaluzny, managing director of Sycamore Partners. “We look forward to working with the company’s management team to build on its 83-year history as a leading Canadian home improvement business serving families, builders and contractors in their communities across the country.”
The Lowe’s-Sycamore Partners transaction is valued at $400 million and “performance-based deferred consideration.” It is expected to close in early 2023.