SAN JOSE — Lowe’s will jettison more than 600 Orchard Supply jobs in the Bay Area, part of a wrenching elimination of over 1,000 jobs in Northern California, according to new official state government filings.
The job cuts — the human toll resulting from the decision by Lowe’s to close all 99 of the Orchard Supply stores — are scheduled to occur as soon as Oct. 20, the filings with the state’s Employment Development Department show.
A total of 620 Orchard Supply jobs will be slashed in the Bay Area, including 406 in San Jose. In regions adjacent to the Bay Area such as the Central Valley and the Santa Cruz area, another 414 positions will be eliminated, including 249 in Tracy. The EDD filing showed that 481 jobs will be cut in Southern California. All told, Lowe’s will eliminate 1,515 Orchard Supply jobs in California.
North Carolina-based Lowe’s, according to an earnings call transcript, conceded that it stumbled with its strategy for Orchard Supply.
Lowe’s missteps, along with Orchard Supply’s core weaknesses, appear to have doomed San Jose-based Orchard Supply, according to comments from the company’s top boss during an August conference call with analysts.
“Relative to Orchard, as the old saying goes, hindsight is 20/20, but I think there were some strategic decisions made that if they had to be done over, would be different,” Marvin Ellison, Lowe’s chief executive officer, said during the Aug. 22 conference call, the day the Orchard shutdown was announced.
The remarks on the conference call suggested that Lowe’s thought it could transform Orchard Supply into a market leader in Orchard’s retailing category. But eventually, Lowe’s determined that it had lost that bet.
“Even if we could grow Orchard into the most dominant small box specialty home improvement channel in America, it would have a very minimal positive impact from an earnings and from an overall revenue standpoint for the Lowe’s business,” Ellison told the analysts.
During 2017, Orchard Supply generated $600 million in sales but lost $65 million before taking into account taxes and interest, Marshall Croom, Lowe’s chief financial officer, stated on the conference call.
“The Orchard business was just not running well,” Ellison said.
For decades, Orchard supply has been an iconic hardware store with its roots in San Jose and a reputation for employees who help people out with puzzling home improvement projects.
“The good news is that 86 percent of the Orchard stores that are closing are within a 10-mile radius of a Lowe’s store,” Ellison said. “We’re very optimistic that for any associate who is an Orchard associate that’s looking for a home at Lowe’s, we should be able to find them a position and we’re going to prioritize those individuals.”
