Lowe's Layoffs 2019: Why The Hardware Retail Giant Will Cut Thousands Of Workers

Lowe's (LOW) confirmed a Wall Street Journal report Thursday that it will lay off thousands of workers, from assemblers to janitors. The home improvement retail company didn't specify how many employees would be cut.

Assemblers, who put together grills, wheelbarrows, and other products will be laid off, along with store maintenance staff such as janitors. Those jobs will then be contracted out to third-party companies as a bid to cut costs.

"Associates that were in these positions will be given transition pay and have the opportunity to apply for other jobs at Lowe's," Lowe's said in a statement.

In a roundtable on Yahoo! Finance, Pras Subramanian described the layoffs as "a way to counteract the rising wages of your janitors and your assemblers," and was reminded by Ikea purchase's of Task Rabbit in October 2017.

"The Ikea deal ... basically merged that whole group of freelancers within their company in a way to build Ikea stuff that people have such a hard time with. Is this a similar way for Lowe's to do that? I don't know," Subramanian said.

Brian Cheung said that Lowe's was essentially doing the opposite of Ikea by outsourcing the jobs.

"I think the business model is still a bit unproven here," said Cheung.

"This is actually kind of surprising to me because when you think about store sales it makes sense that people are no longer going to the store to try clothes on because they can get those boxes sent to their house now. You don't need to [physically] run to the store to get your toiletries or other items like that when you can order online.

"But when you think about home goods or home repair things, people do prefer to go to the store to pick up the wood, to pick up the hammers, to get all the tools they need to do a home improvement project.

"So it is kind of surprising to hear — even though this is a big, big boxer retailer — a business model like home improvement kind of suffering from these trends, as well."

The North Carolina-based company has enacted several reforms and cost-cutting measures under its new CEO Marvin Ellison, who took the position in May 2018. Ellison was previously the CEO of the struggling retailer JC Penney.

The company in February closed all 99 of its Orchard Supply Hardware stores, which were located in California, Oregon and Florida. The cutbacks also included shutting down its Iris by Lowe’s Home Automation platform.

The company announced in November that it was closing 51 underperforming Lowe's stores in the U.S. and Canada. Lowe's has "2,200 home improvement and hardware stores and employ approximately 300,000 associates," according to the company's website.

"We are on the right path to make Lowe's an omnichannel retailer that provides an outstanding experience for our customers, a great place to work for our associates, and a company that delivers better, more consistent returns for shareholders," Ellison said in a press release on May 31.

Lowe's has been trying to catch up to its main hardware retail rival, Home Depot, which has had higher average sales in its stores. Lowe's has also struggled to expand internationally, while Home Depot has strong businesses in Canada and Mexico. Ellison previously served as an executive for Home Depot from 2002 to 2014.