During a recent quarterly earnings call, Lowe’s announced that all 99 Orchard Supply Hardware Stores will close by early February.
The announcement comes five years after Lowe’s purchased the retailer out of bankruptcy for $205 million. The purchase allowed Lowe’s to establish a greater footprint on the West Coast, which was valued territory for the North Carolina-based home improvement and hardware chain.
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But Orchard Supply wasn’t earning enough for the company. The stores’ smaller sizes and limited offerings didn’t fit in with Lowe’s model, and while Orchard Supply generated $600 million in sales last year, that figure represented less than one percent of Lowe’s overall sales of $68.6 billion.
“It became clear to me we wanted to be focused on our core retail business,” CEO Marvin Ellison said during the call.
Closing Orchard Supply is one of the first major moves under Ellison, who took over six weeks ago with a mission to close the gap between Lowe’s and industry leader Home Depot. His overhaul began by eliminating a number of the company’s top executive positions — including the chief operating officer, chief customer officer, corporate administration executive and chief development officer — and will continue with a deeper evaluation into the company’s existing product lines, with an eye on eliminating lower-performing items.
“In addition to the decision to exit Orchard Supply Hardware, we are developing plans to aggressively rationalize store inventory, reducing lower-performing inventory while investing in increased depth of high-velocity items,” Ellison said in a company statement. “Exiting Orchard Supply Hardware and rationalizing inventory are the driving force behind the changes to Lowe’s Business Outlook.”
Founded as a farmer’s cooperative in Oakland in 1931, the chain was purchased in 1996 by Sears, which spun it off as a publicly-traded stand-alone company in 2011. Orchard filed for bankruptcy protection two years later, and Lowe’s purchased it for $205 million.
During that time, Lowe’s tried to expand the Orchard Supply brand. Its first Florida locations opened two years ago and a new store was opened in East Hollywood last year. More than 40 of Orchard’s locations are in the San Francisco/Oakland/San Jose Area with others located throughout California, Oregon and Florida.
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The store’s 4,000 employees learned of the news last Tuesday, according to the San Jose Mercury News.
“While it was a necessary business decision to exit Orchard Supply Hardware, decisions that impact our people are never easy. We will be providing outplacement services for impacted associates, and they will be given priority status if they choose to apply for other Lowe’s positions,” Ellison, said in a statement.
Liquidation sales are expected to begin soon at all of Orchard’s locations.
Joshua Latham
I love Orchard Supply Hardware, they were a nice middle ground between smaller mom and pop or Ace hardware stores, and huge Lowe’s or Home Depot big box stores. I am going to miss them.
Frank
I agree, better service and better quality products, I hate seeing businesses like this close down
TonyT
Eddie Lampert was part of the problem – it’s hard to stay in business when you’re too far in debt. From Wolfstreet.com:
“Sears Holdings – by then run by hedge-fund guy Eddie Lampert – announced that it would extract a special dividend of $450 million out of OSH, and that OSH would borrow the money to pay this dividend.”
DC
Very sad.
Neighbor Joe
Exactly how Bain Capital killed ToysRUs. Borrowing to pay special dividends to the wealthiest of investors, while working people suffer. Unbounded greed they tell us is democracy. Special ring in hell for people like that.
Brad
Wtf? I’m all for torches-&-pitchforks but Toy’s-R-Us was already out of business with no employee’s or merchandise when Bain Capital bought the company out of bankruptcy.
TonyT
I’m going to miss OSH’s ads about getting lost for weeks in the huge blue or yellow stores….although I note they haven’t run those for a few years
Joel
Absolutely. They were small enough to learn my wife, my kids, and my name. They were happy when I showed up and they were great to talk to. My 4 year old son used to ask me on a weekly basis if we were going to orchard, as he loved to play with the hammers and knock on the displays of tool sheds. They were definitely more expensive, but we’re worth the personal touch they gave to their usual customers. You will be missed more during Halloween and Christmas.
rob
Their holiday decor was always great. Each season I’d go in there and find 1 or 2 things I surely didn’t need but at the same time I couldn’t live without. Their buyers had an eye for unique holiday items, not always the large blow ups you’ll see at a big box but items that looked handmade which is often hard to find. I can look in my yard and find many items I purchased be it for 4th of July, Easter, Halloween, Thanksgiving and Christmas. I guess the best way to say it is they used the “Target effect” the best in hardware. I may go in for a plant or something for a specific project and I’d walk out with a couple six packs of flowers and a metal stand up Halloween Pumpkin for the yard.
Robert
Here’s to hoping Lowes takes a page from the millions of small nuts/bolts, caps inserts, retainer rings, other fittings and odd ball connectors that OSH had dedicated an entire isle to.
TonyT
Doesn’t sound like it – the CEO was talking about “reducing lower performing inventory”. BTW, a former co-worker nicknamed OSH “Orchard Aerospace” because of that kind of inventory.
Jim Felt
That and sadly, to me at least, not much else worth bothering with.
And this exact kinds of speciality differentiation is exactly what their new(est) CEO said they did not want as a takeaway for Lowe’s itself.
So they’ll double down on appliances and crappy lumber I guess.
Yawn.
Adam
And a well-organized aisle, at that. I’ll probably end up buying at least a few drawers of small fasteners for use in our shop.
Charles
This does not make me feel good about Lowes. Orchard made money but they clised it because it didn’t make enough?!? Great, we have a professional bean counter who doesn’t know the difference between a nylock nut and a locknut making decisions. Isn’t this how Sears started going down the toilet 25 years ago?
CT
Thats Wall Street thinking in a nutshell. How many great companies have fallen because bean counters took over.
Jim Felt
Oh. Upon reading of their eminent demise I noticed both of their Portlandia stores had “closeout” banners up.
So I go in like a good value driven consumer and wind up with three kinda odd items and upon checkout found none of them were “marked down”.
Bait and switch to the end.
Regardless I did appreciate their brand differences from the HD. Choice is always good.
Too bad Lowe’s itself is so “family” centric. JMO.
Gordon
Most liquidations are done by 3rd parties. Everything goes back to MSRP so they can put those “Up to 75% off” banners up. My local sears closed and they had a vice that was 40% off and still more expensive than Sears.com. They also conveniently said they would not pricematch, accept sears points, or sears coupons.
Mahalo
Exactly right, Gordon. People don’t understand how these liquidation sales typically work, and get very upset to find that someone “going out of business” isn’t willing to just giveaway the inventory. Well, in case of bankruptcy, there’s a whole lot of pissed off creditors that want to make more than a penny on a dollar. With OSH, which isn’t going out of business in the same way as Toys R Us for example, their Lowe’s overlords aren’t about to let that inventory go for peanuts.
Jim Felt
I do know how Third party liquidators work. They also frequently bring in merch. from other victims.
That said in Portland they have “Store Closing” and “Liquidation” signs and banners and no liquidators. Only their now morose existing staff.
It’s all very sad.
Wayne R.
Who’s gonna try for one of those signs? They’re classic!
Don’t let them end up in a dump.
rob
The original Orchard sign in San Jose is being discussed as a historical landmark and the City is hoping to keep it….but that’s kind of up to Lowe’s since they technically own the sign. Orchard Supply and San Jose have a deep connection before it was the home of Silicon Valley it was the home of orchards. For many years they were one of the lead sponsors of the San Jose Sharks as well
Framer joe
Bad move for Lowe’s, pissin off your customer base is never good…and putting people out of work is always horrible.
Mahalo
True, but most people don’t equate OSH and Lowes, so few will realize that Lowes is responsible for the closures.
Michaelhammer
In the end, no one cares, that’s why OSH is closing in the first place.
Thomas
Agreed, 4000 Americans will lose their jobs and while there is time for some of the employees to look for new work, I am very disheartened to see ANY American lose their job. Doesn’t matter if I dislike the CEO or company, I sincerely do not want to see Americans out of work.
That being said, some CEO’s and higher executives are either insulated to the point they do not understand their customer base or are trying to appeal to a vocal minority. In the last several years, I’ve seen cases in both spectrum, more so with the second. By all means, independently research for yourself as knowledge is power.
Target, Starbucks, Disney, ESPN(which Disney owns), Kelloggs, Amazon, Google, Apple just to name a few large corporations have taken actions that have alienated portion of their audience in some shape or another.
What does concern me is that Lowes, has massively removed the amount of Ames products they used to carry and has seemingly discontinued the sale of any Wooster products. Albeit I am not thrilled about this fact, Ames and Wooster have globalized, yet some of their products DO have domestic content. Truper branded products have replaced Ames products and Valspar replaced Wooster.
I’ve been to Orchard Supply and truly the name lives up to the amount of products they carry. Sad to see Orchard shut down as I much prefer to support a brick and mortar business if possible. Couldn’t pay me enough to ever support Rockefeller Bezos.
Paul
“In addition to the decision to exit Orchard Supply Hardware, we are developing plans to aggressively rationalize store inventory, reducing lower-performing inventory while investing in increased depth of high-velocity items,”
With that mindset, I wonder how long before they drop gas-powered lawn tractors, ZTRs, and snow blowers?
Gordon
I think a huge problem is that their tool section is dominated by SBD. Dewalt, Craftsman, Stanley, PC, Irwin, ect. It seems like Lowes needs SBD more than SBD needs Lowes. I don’t know how much “rationalization” they can do before SBD pushes back.
Really, it would be nice to see them work with the more global companies like Bosch, Makita, Hitachi, and even more Pro-grade tools like Hilti. I think we would all benefit with a stronger US presence from Bosch.
OhioHead
Hilti tried selling tools 10 years ago via HD w/ limited success; true pro’s (IMO) buy via supplies houses & only shop @ Big Boxes when they don’t have what they need in their trucks/emergency purchases……
No OSH in the MW and w/ the description I would shop at a OSH like an Ace/Tru Value b/c of product knowledge & selection vs HD or Lowe’s (w/ limited employee knowledge).
R. Hartmann
This guy: (Marvin Ellis) was at Home Depot, left to go to J.C. Penny where he almost
put them out of business with the changes he made their. Now he is over at Lowe’s’s
where he is now closing OSH for under performance or should I say Money.
Osh has a valid reason to exist along with Lowe’s because they have items that Lowe’s does not have.
I wish someone would buy out Osh and keep them in business.
Long time customer of Osh and Lowe’s.
Toolfreak
Oh man, I didn’t even realize it was that guy.
Yeah, Marvin Ellison has some really terrible ideas on how to run a company.
He has no business being the CEO of anything.
Hopefully Lowe’s gets rid of him before OSH starts closing any stores or before Lowe’s turns into some weird thing like he tried to do to JCP.
Andrew Wagner
Just to clairfy, Toolfreak, Marvin Ellison was not the JCP CEO who led the infamous revamping that did away with sales, coupons, etc. in favor of “tiered pricing” and the like. That CEO was Ron Johnson — not to be confused with Sen. Ron Johnson (R-WI) — who before joining JCP ran Apple’s retail division and is considered the brains behind the “Genius Bar.”
(I’ll pause so you can wipe the expugned soft drink from your screen and so you can laugh hysterically for a few moments…..)
Johnson was fired 17 months after he was hired, replaced by the company’s fomer CEO, Mike Ullman, who was replaced by Ellison in 2014.
So, as you can see … a well-oiled machine over there!
Thanks for reading,
-AW
Herf
Marvin Ellison Is just has bad has Johnson was Ellison brought all is friend and family over to jcpenny and left it worse then when he took it over look at the language he used when went to jcp it the same .the guy is walking strink magnet he increased jcp from 4+ percent he was there and now he doing the same thing at Lowe’s they got rid of the construction door check so people can walk right out
Elizabdth Bondoc
I worked at WLA OSH.. me n my co worker ecpecially our customers sad about this. I wish amd all customers wishes to keep the WLA . Remove the OSH sign outside and put LOWE’S instead. We at WLA are number one money making to all OSH’ S. As an employee for over 13 yrs. I enjoyed working there I treat my co workers like a family. Our customers like our service ..some were in tears yesterday n gave me a hug. I wish Lowes keep us here in WLA.. remove Ochard n put Lowes i nstead.
Lynyrd
If this plan was discussed with Stanley Black & Decker they (SBD) definately kept it confidential. On the new Craftsman site it listed and still lists Orchard Supply Hardware as a place to buy C’man tools.
One would think this was discussed between the two, as it will certainly cut into initial distribution of the new line of tools.
OSH is pretty big here in California. It was a great place to buy brands not commonly found such as Mayhew Tools, Nupla, Imperial. I was hopeful OSH would survive once Sears Holdings sold this to Lowes in 2012 (Sears acquired in 1996).
OSH Stores that opened in the last few years were fantastic. A little larger (60K sq ft vs 40K sq ft), expanded lawn care and sporting goods, carhartt clothing, open ceilings, polished concrete, a real pleasure to shop. For those who never shopped an OSH, think a sophisticated, larger ACE Hardware.
From OSH Site “August 23 and will continue for approximately 10 weeks.”
Ryan Jacob
We don’t have any OSH stores in our area but I have ordered online from them before. I found landscape lighting there that I couldn’t find anywhere else. It’s really too bad that they are closing up shop.
Agnes Lien
So so SAD TO LOSE OUR OSH STORE..SO
CONVENIENT, HELPFUL! NO PLAN TO GO TO LOWES!
Toolfreak
How about we keep all 99 OSH locations and just get rid of CEO Marvin Ellison instead?
Seems a lot easier to get rid of one guy rather than 99 stores and all their employees.
I’m still surprised that people tolerate this kind of thing.
There’s something else going on here with him eliminating the other executive positions, and there was always the option to sell/spin off OSH to survive on their own once again.
Terri
I agree 110% with your comment.
OSH was great-had more down to earth items at pretty good prices.
Lowes being a huge store charge more for the same stuff OSH had. Go figure!
1931 -wow! That shows how successful they have been. And to shut them down…not the right move in my opinion.
Get rid of the CEO instead.
Jim Felt
Robert Nardelli who literally trashed the original successful Home Depot model after leaving GE was in a similar stock-options above al else mode. Remember Chain Saw Al from the 1990’s?
Regardless Nardelli went on from HD to damn near sink Chrysler until Fiat acquired them.
Corporate Board Rooms are not temples of sentiment or kindness. D’oh.
Rick Owen
Great examples of a failed business model. This type of management highlighted by Jack Welch will eventually destroy the US economy. There is only so much you can reduce. They pay millions to follow this path to ruin. Can’t one of them think for themselves and innovate to success. Can’t stockholders be satisfied with a solid regular income?
Richard Williams
No, they can’t. Can you say ” greed ” ? It’s bringing this country down and led by the guy americans voted to be their leader. Wake up.
T
The sad reality is the OSH sales weren’t enough to justify its existence. 600 million a year across 99 stores is only $500,000 a month in sales per store. That is not enough to keep a store that big alive. I think when they remodeled they devoted too much space to overpriced decor items.
I like to think that if they had stayed a hardware store and had more tools, lumber, and material instead of being a half Ace / half Homegoods they might have had a chance.
I wonder if Lowes will keep the stores that are not too close to an existing Lowes and turn them into a ‘neighborhood Lowes’ sort of how like Target is doing with their smaller store format. From the remarks of the new ceo, doesnt sound like it.
GL
I will miss OSH. It was a place where you could find the odd connector or fastener. The first place where I was introduced to Spax fasteners. You could go in there with a problem and walk out with a solution along with a lot of good advice from a knowledgeable crew or employees.
They also used to host the OSH Fair where you could meet and greet vendors and learn about their products first hand.
George
I’m heart broken. I do weird stuff and os allows me to do that. Without Lowes picking it up in their stores I’m in serious trouble. Even today I went to os and got a bolt I needed. When I was at lowes I checked if they had the same long length. Yep, not even close. Lowes has problems and I don’t expect them to step up much. Over a month ago I was looking for bucket lids. No one had any. So I really let Lowes have it. This included their inventory guy. He said they had some. I told him I would pay triple if he found some. Nope, no lids. Took them 3 weeks to get some. Tons of buckets, no lids. Really ? You can include well mart and home depot to this. Rediculous.
Alison
When Sears bought OSH in 1996, and later, Sears Holdings (You can thank Eddie Lampert, of course) placed that 450 million dividend debt on OSH in 2005, it was ignition start of OSH’s demise. I’m sure Lowe’s did want to use OSH as leverage to get into the California market for retail hardware. OSH was up for grabs. It would have closed for good in 2013.
I live in the SF Bay area, close to the original OSH location on San Carlos Street. OSH is (and soon, was) considered more as a local upscale ACE store, over a regional chain. When the news was announced that the store chain would close, the scene at the stores looked more like the black Friday sales near Christmas, or, better yet, the rush to the supermarket before a major storm hits, even with sales at 10-30% off. Comments from customers and employees revolved around what some employee is going to do after the store closes, whether Lowe’s would provide a good severance/rehire (I’m being told the ONLY favor they’re giving is better consideration to hire with experience with OSH, but NOT at the same pay rate given in relationship to years with OSH.) Lots of comments about “I hate Lowe’s. They can screw themselves.” Other comments “I’ll miss you. Let’s stay in touch.” It’s sad.
rob
Very sad day for CA hardware stores. Orchard has such a strong presence up and down the state. They were the large hardware store that felt small, someone would always greet you at the door and ask if they could help you. The stores always felt clean, unlike many big box retailers where it often feels dusty and aisles are abandoned wastelands.
Their stores are focused on their communities, managers would often stock items based on the seasonal needs of their location(s) and if weather was looking bad they’d stock the front sections with ACs. tarps, boots etc. After the North Bay Fire Storm in Napa and Sonoma Counties the management team from the corporate office in San Jose drove to their store in Santa Rosa and opened it up so people could make copies of keys, get tarps or just find a place they could decompress with all that was going on around them. This was while the fires were still going on the morning after the firestorm rolled through, the normal 2hr drive from SJ to Santa Rosa was probably closer to 3 hrs as people were evacuating and fire crews were driving into the fires. Beyond opening the store the management team fired up the BBQs and cooked burgers for anyone that came by didn’t matter if they were a customer or not, they just wanted people to eat and feel a sense of community. Peter Hartlaub of the SF Chronicle had a great story and podcast on this story-often times you could hear people fighting back tears as they were telling their story.
Will be interesting to see if another regional chain steps in and takes over some locations. Many were remodeled in the last few years and feature large nurseries. I am hoping maybe Friedman’s out of the Santa Rosa area takes over some of the stores as they expand. Many former OSH stores go back to YardBirds days before YardBirds was purchased by Home Depot and closed.
Denise Underwood
It feels as if I have lost a long time neighbor and friend; listen up Lowe’s, you will not get another penny from me! Your ignorant CEO and board of directors do not concern themselves about what the customers want (just read the previous comments) so why on earth do would we give a fig about shopping at Lowes, with the exception of nice employees to talk with, you have nothing that I want to purchase! I too, shop for unusual things that I get at OSH! If the OSH stores were not doing well it was because of your inept leadership!
SDD_905
I’m sorry to hear about the OSH stores being shut down.
In Canada, Lowes bought RONA/ Reno Depot about 3-5 years ago, but they have a kept the brands running.
I suspect that in the next 18 months we will see Lowes announce closures of both chains.
Rona/ Reno Depot have top notch staff with experience and I personally give them my business despite paying a little more.
Rick Owen
Yet another CEO who follows blindly the path of other past CEO’s who have ruined multiple US businesses. Sears, JC Penny, KMart, and dozens of other large companies only know how to fire people(layoff sounds so much nicer) reduce product lines and shrink their businesses into the ground. Can’t someone come up with a better strategy than this? These guys get paid millions to follow this path to ruin. If that’s all they want, I can save them millions. I can do the same for $250,000. Any company want to save your stockholders a few pennies at the cost of destroying the welfare of the families who lose their income.
Fred Meder
Eddie Lampert is the problem here. Can someone tell me why we need to support “clean coal” to protect 45k jobs when no one is up this mans ass for destroying countless jobs across our nation? And coal will never be clean. It kills many people each year. We can not drink the water where we live because of it and we can not eat many of the fish. But Lampert can destroy business after business for money.
Stuart
What does Lampert, CEO of Sears, have to do with Lowes closing their smaller retail chain?
OhioHead
He ran OSH into Bankruptcy Court w/ the dividend/debt payment requirements as part of the acquisition & Lowe’s bought on the cheap & is now closing OSH????
Mike
I love Orchard Supply and hate Lowes and Home Depot. Those stores don’t care about the average customer. Ace sucks, Aboy sucks. True Value sucks. Really this means I’m losing my fav home for tools and parts. It’s fun. Plus its Orchard Supply that introduced me to Carhardt and I love that brand.
Watson
It is sad and surely called GREED, this has been happening for along time with many businesses across the United States. They say the unemployment rate is 4.3percent here in Santa Clara county, only there is a fine line between the statistics behind the percentages. Most companies are only hiring on a part-time basis, and it’s the end of the year, seasonal hiring. Not going to work out for most people that are full-time workers. All I can say is unemployment rate is going up unless you match all people up with descent, full-time job positions. With the same pay that they were receiving.