Lowe’s has entered into a definitive agreement to sell its Canadian retail business to Sycamore Partners for $400 million in cash plus a performance-based deferred consideration. The business, which is based in Boucherville, Quebec, operates approximately 450 corporate and independent affiliate dealer stores under several different formats and banners, including RONA, Lowe’s Canada, Réno-Dépôt and Dick’s Lumber.
Lowe’s Canadian business represents approximately 7% of its full year 2022 sales outlook, but divesting the operation is “an important step toward simplifying the Lowe’s business model,” said Marvin Ellison, Chairman, President and CEO of Lowe’s in a statement.
“We remain confident in our short- and long-term outlook for the U.S. business, underscored by improved sales trends and strong profit flow-through in the third quarter, as well as our expectations for solid business performance for the remainder of 2022,” said Ellison in a statement. “By executing this transaction, we will intensify our focus on enhancing our operating margin and ROIC [return on invested capital], taking market share in the U.S. and creating greater shareholder value.”
The home improvement retailer is in the midst of a broad realignment as it seeks to catch up to rival Home Depot, which has been experiencing greater success, particularly with professionals. Part of the realignment is being seen in the Lowe’s C-suite: EVP and Chief Brand and Marketing Officer Marisa Thalberg left the company in September 2022 and Lowe’s doesn’t plan to fill her role. Additionally, Lowe’s is merging its Pro organization into the store operations division as well as integrating its merchandising and marketing functions.
The acquisition will help Sycamore further build out its retail portfolio. The private equity firm made an offer for Kohl’s as well this year, but it was ultimately rejected despite pressure from activist investors. The Lowe’s transaction is expected to close in early 2023, subject to customary closing conditions and regulatory approvals.
“We are honored to partner with Lowe’s to establish Lowe’s Canada and RONA as a standalone company headquartered in Boucherville, Quebec,” said Stefan Kaluzny, Managing Director of Sycamore Partners in a statement. “We look forward to working with the company’s management team to build on its 83-year history as a leading Canadian home improvement business serving families, builders and contractors in their communities across the country.”