Lowe’s, which operates about 1,700 stores in the United States, said on Monday that it had closed 10 on Sunday and would close another 10 within a month.
Some 1,950 workers will be laid off. As of January, Lowe’s had 161,000 full-time and 73,000 part-time employees.
The company also said it planned to open only 10 to 15 new North American stores per year starting in 2012, down from a previous goal of 30.
Shares of Lowe’s were up 2.8 percent at $21.37 in morning trading.
Chief Executive Officer Robert Niblock said in a statement that the company had to “make tough decisions” to improve profitability.
Lowe’s has been slower to cut costs than market leader Home Depot Inc , whose sales at stores open a year or more have beaten its rival’s for nine straight quarters.
“This continues (Lowe’s) progress toward becoming a more efficient operator,” Janney Capital Markets analyst David Strasser said in a research note on Monday. “Management is making significant changes that should improve returns.”
Expenses from the closings will come to between $100 million and $130 million, including lease obligations, employee layoffs and inventory adjustments, Lowe’s said. It expects to record those charges in its current and next quarters, according to a regulatory filing.
Including noncash expenses, the closings and abandoned store openings will reduce earnings by 17 cents to 20 cents per share this fiscal year, Lowe’s estimated.
Lowe’s reduced its full-year sales and profit outlook in August as U.S. homeowners put off renovations. It also announced plans to buy back $5 billion of its shares.
Lowe’s becomes the latest retailer to pare the number of stores it operates amid tepid consumer demand.
Gap Inc last week affirmed a plan announced in June to close 200 of its 889 namesake U.S. stores, while luxury retailer Saks Inc has closed seven of its department stores in the past two years and plans to eventually close a few more over time.
(Reporting by Phil Wahba in New York, editing by Dave Zimmerman and Lisa Von Ahn)