Lowe’s to Cut 1,700 Management Jobs, Add Weekend Staff

Lowe’s Cos., the second-biggest U.S. home-improvement retailer, plans to eliminate 1,700 middle- management jobs in stores as profit growth trails that of larger Home Depot Inc.

Brent Kirby, Lowe’s senior vice president of store operations for the North Central division, declined to say how much the moves will save the company. Lowe’s also plans to add 8,000 to 10,000 weekend sales positions to improve staffing at the chain’s busiest time of the week, he said in an interview. The change takes effect Jan. 29.

Lowe’s, led by Chief Executive Officer Robert Niblock, is cutting managers responsible for store operations, sales and administration while creating a new assistant store manager position. These managers will oversee such merchandise categories as paint, hardware and flooring, said Kirby, 42.

Some shoppers remain reluctant to spend on household improvements amid sinking home prices and mounting foreclosures.

The part-time weekend staff will try to get customers to buy more, said Joseph Feldman, an analyst at Telsey Advisory Group in New York.

“It sounds like middle managers weren’t driving incremental sales,” Feldman said in an interview.

Lowe’s had about 239,000 employees as of Jan. 29, 2010, compared with Atlanta-based Home Depot’s 317,000. Profit growth at Lowe’s trailed Home Depot’s last quarter, and analysts surveyed by Bloomberg project that trend to repeat this period, with an increase of 40 percent at Home Depot and 17 percent at its smaller counterpart.

Controlling Labor Expenses

As store openings have slowed, controlling labor expenses has helped Lowe’s improve gross profit margin. The company’s margin widened to 35.05 percent in the third quarter ended Oct. 29 from 34.20 percent a year earlier, helped by the hiring of more part-time seasonal workers and using employees instead of outside contractors for plumbing and electrical repairs in stores. In the same quarter, Home Depot’s margin, the percentage of sales remaining after subtracting the cost of goods sold, improved to 34.3 percent from 34 percent a year earlier.

Mooresville, North Carolina-based Lowe’s rose 49 cents, or 2 percent, to $25.56 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 16 percent in the past year.