Will Lowe’s See a Light at the End of the Titles?
It’s been almost a year now since Lowe’s has publicly suffered the consequences of its place in the downturned economy. Late last summer after corporate decided to close seven stores across the country, a firestorm erupted when the locations were actually shuttered. The problem was not just the demise of a handful of units nor the concurrent loss of jobs, nor a consumer backlash at the loss of a favorite retail venue.
The store closings became a local and then a national issue, mostly due to Lowe’s handling of the closings. The controversy began in Chicago with the sudden closing of two Lowe’s stores. Members of the community questioned why a move as severe as store closings was necessary. These questions expanded to the other effected communities and then quickly went national as even a United States Senator began to challenge the need for the store closings.
Lowe’s promptly announced that these stores were simply underperforming and that the company saw no coming upside. Some of these however were fairly new. None were to be replaced by newer sites nearby. One of the closed stores, in upstate New York, had only been open since February 2009, took years of planning and zoning discussions, and enjoyed a payment-in-lieu-of-taxes agreement that gave it reduced taxes for 10 years. Adding fuel to the fire, reports covering specific closings indicated that store employees had been gathered on a Sunday evening at the store’s closing and told that it would not be opening the next morning.
To escalate its public relations catastrophe Lowe’s was about to announce an additional twenty store closings. At the time of the official announcement, the company’s official press release stated that of the twenty, ten were already closed at the time of the release. The announcement went on to state that some 19,500 employees would be losing their jobs as the stores were shuttered. This at a time when politicians were constantly grabbing headlines based on the issue of woeful unemployment statistics.
Of course, what preceded these store closings were very troubling quarterly financial reports. Subsequent reports were no more optimistic. As if this was not enough, after all the negative publicity that surrounded the rounds of store closings, what soon followed Lowe’s in the media caused even greater controversy, if that was possible. Bowing to pressure from the Florida Family Association, a conservative Christian group, Lowe’s decided to end its advertising campaign on the TLC show “All-American Muslim”.
The cancellation announcement created a media stir that only served to fan its own flames. Several religious, ethnic, consumer and political groups demanded Lowe’s withdraw its cancellation while others backed Lowe’s decision. Ultimately Lowe’s decided that backing down a second time to reverse the decision would seem weak and waited for the storm to subside on its own. The company received over ten thousand hits on its Facebook page both supporting and denouncing its decision.
Last year’s third quarter was pretty much disastrous for Lowe’s. The company reported that net income had dropped 44% as store-closing charges undercut a slight increase in quarterly sales. Net earnings of $225 million were reported, compared with $404 million in the year-ago period.
Meanwhile archrival Home Depot reported a third quarter sales gain of 2.9% as the company posted a 4.2% comp-store sales increase. Even bigger growth was reported as net earnings showed a 13.0% increase.
It appeared that Home Depot was out of the doldrums, much of which had been created by a now disparaged era of questionable management which saw wild spending on non-core acquisitions and ancillary investments including a budding system of convenience stores. At the same time Home Depot claimed savings by cutting back on experienced staff members and training and controversially relocating much of its customer service operation to India.
Lowe’s finished last year seemingly in an uphill battle over its questionable handling of basic business practices while watching its chief competitor smile through long-sought financial bliss. Many wondered what the company could do to right its ship, at least in the public eye, as well as on Wall Street. Then in a recent press release, Lowe’s announced a series of promotions and title changes which included ten high-level executives.
While the number of execs seemed rather high for a single announcement, more surprising was the tone of many of the newly attained titles. Rather than moving up the corporate ladder, say from Senior VP to Executive VP, most of the executive moves were to newly created titles which seemed to avoid the connotation of promotion. Thus the former Executive VP of Merchandising became the newly coined, Customer Experience Design Executive. The former Exec VP Logistics and Distribution is now the Digital Interfaces Executive, and so on.
When a generally admired company is struggling financially, it can find itself questioned on fundamental decisions. This often leads to executives carefully monitoring their own decisions as they proactively seek solutions to better move the company forward. Perhaps these oddly nondescript corporate identifiers are an attempt to create a light at the end of the title.
As an editor at Chain Store Guide, a considerable amount of my time is spent updating corporate promotions and upgrading titles. A move from VP to Senior VP connotes time well spent by an executive and a considerable reward. It seems for the moment that Lowe’s has decided to, at least in-part, do away with these indications of tradition and success in order to embrace a new age moniker for its hard-working, dedicated core. How this will benefit the corporate bottom line and reverse several public relations nightmares, only time will tell.