Orchard Supply Hardware – whose mission was to be according to its Web site, "America's Neighborhood Hardware and Gardening Store with an emphasis on paint, repair and backyard" – is an iconic name in California for the Great Depression, when it started out as a non-profit cooperative to provide for farmers. But now it should die.
It closes its 98 stores in California, Oregon and Florida, as well as its distribution center in Tracy, California. The 4,000 employees are dismissed. Liquidation sales start Thursday. So said his owner, Lowe's (LOW), who is under pressure from Home Depot. This "exit" was "a necessary business decision," said Lowe CEO Marvin Ellison in a statement. Let-go employees "get priority when they apply for other Lowe positions."
Lowe now gets the physical meltdown ̵
This ends Orchard's long history of selling and reselling, with riots and a bankruptcy in between. In recent history, Sears acquired OSH in 1996. In 2005, Sears Holdings, now headed by hedge fund-type Eddie Lampert, announced that it would extract a $ 450 million special health and safety dividend and that OSH would make the money Borrowing would pay this dividend.
In January 2012, the now heavily indebted occupational safety in the typical private equity process was released to the public; Eighteen months later, in June 2013, OSH filed for bankruptcy under the debt that Sears Holdings had imposed on it.
This is when Lowe came in and bought most of his assets out of bankruptcy. At that time, OSH had 91 stores. Lowe paid $ 205 million in cash. It was an effort to step on the tails of Home Depot in California.
So the media raved about the deal in September 2013 when the acquisition was completed:
The deal looks like a smart move by Lowe to counter the competition in Home Depot's lucrative California real estate marketplace largest home improvement retailer. Home Depot has more than twice as many branches in California as Lowe & # 39; s and they are strategically located, giving the company better access to consumers.
The Californian market is booming, in particular because of its enormous population. Here, Lowe's has only 110 stores out of a total of 1,750 North American stores, while rival Home Depot has 233 stores. Home Depot enjoys another advantage as it is located in high-density areas. OSH is also present in California's high-density 1A locations and has 89 of its 91 stores in the state alone. In one fell swoop, Lowe's can gain access to OSH's world-class real estate, without the time and expense of investing in self-employment.
The hype about corporate acquisitions and the ingenuity behind them can be quite amusing.
Of the businesses that went bankrupt, 71 survived the trial. The remaining shops were closed. Lowe's continued to open new stores, including his first in San Francisco, in the North Beach area, in a place vacated by Petco. The opening was in 2015. It's a big deal, spanning two buildings connected by a skyway. I rarely saw more than a few customers in it, unlike our other neighborhood hardware stores, which were small, crammed and often packed. So it was hard to see how this huge business would ever make money.
I took this picture this morning and chatted with a nice but still stunned employee. Everything was said to you yesterday. The sign for the entry – "Now Hiring Happy People" – has now been bypassed by the events:
In 2016, OSH expanded to Florida and opened its first stores outside the West Coast with large Hoopla. At that time, I had written about the meltdown for a while, but Lowe still did not understand it. Now they get it.
In his quarterly earnings report, Lowe & # 39; s combined the expected cost of this "strategic revaluation," which ranges from $ 620 to $ 705 million, to a store she bought for $ 205 million.
- $ 230 million as a result of this "exit," which led to "long-lived impairment of assets and discontinued operations in the second quarter."
- Costs of $ 390 to $ 475 million "related to lease obligations, accelerated depreciation and severance pay obligations".
This results in another chapter of Sears Holdings and another chapter of the Real Meltdown.
Even the steady sale at our hero of the day, Nordstrom, has actually fallen!