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Lowe's Intends To Exit Retail Operations In Mexico; Updates Outlook

Lowe's Companies, Inc. (LOW) announced the company intends to exit its Mexico retail operations and is exploring strategic alternatives. The company has also identified certain non-core activities within its U.S. home improvement business to exit, including Alacrity Renovation Services and Iris Smart Home.

Marvin Ellison, Lowe's CEO, stated: "With our strategic reassessment substantially completed, we can now intensify our focus on the core retail business."

The company has updated its business outlook to reflect charges associated with its strategic reassessment, as well as its expectations for fourth quarter operating results. For fiscal 2018, adjusted diluted earnings per share are expected to be $5.08 to $5.13. Comparable sales are expected to increase approximately 2.5 percent. Total sales are expected to increase approximately 4 percent.

Lowe's reported third-quarter net earnings of $629 million and diluted earnings per share of $0.78, which included pre-tax charges of $280 million, compared to net earnings of $872 million and diluted earnings per share of $1.05 in the third quarter of 2017. Excluding the impact of the charges, adjusted earnings per share decreased 1.0 percent to $1.04 compared to the prior year.

Sales for the third quarter increased 3.8 percent to $17.4 billion over the third quarter of 2017, and comparable sales increased 1.5 percent. Comparable sales for the U.S. home improvement business increased 2.0 percent for the third quarter.

Lowe's said its management has substantially completed strategic reassessment of the business and identified actions to drive focus on its core home improvement business. The company noted that additional pre-tax charges of $460 to $580 million related to these decisions and consisting of lease obligations, accelerated depreciation and amortization, severance and other costs are expected to be incurred in the fourth quarter of fiscal 2018, and have been reflected in the company's updated business outlook.

As of Nov. 2, 2018, Lowe's operated 2,133 home improvement and hardware stores in the United States, Canada and Mexico representing 214.7 million square feet of retail selling space.

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