Lowe's Store Closings Could Be Smart Decision: Analyst

Lowes' announcement that they were closing more than 20 stores was greeted positively by some analysts Monday afternoon.

The home improvement chain will close stores that are underperforming and will also reduce their expansion for the coming years, reducing the number of new stores from 30 per year to 10-15.

MarketWatch reported Stifel Nicolaus and Co. analyst David Schick as saying the companies actions suggest a shift in thinking -- from 'how to re-invigorate the growth story' to 'how to best realistically drive [return on invested capital].' The most important point here, though, is the willingness Lowe's has to re-examine existing strategic assumptions.

Schick also told MarketWatch that other companies such as Wal-Mart and Lowes' primary rival Home Depot saw a positive impact in reviewing and adjusting their strategies.

Barrons reported another analyst as saying that the dominance of Home Depot, especially in the northeast, may have led to the stores being shut down underperforming.

As of 4 p.m., Lowes shares were at $20.89.