By CultureBanx Team
- Lowe’s is giving full-time employees an additional $300 special bonus due to COVID-19-related demand
- Marvin Ellison will need to dig deep during this pandemic, into a DIY strategy that can boost sales
Lowe’s (LOW -1.09%), which is undergoing a turnaround led by CEO Marvin Ellison, is giving full-time employees an additional $300 special bonus to help combat coronavirus related financial stress. The home-improvement chain’s payments are expected to cost the company $80 million, bringing the total pledged for pandemic relief to $250 million. Investors have remained leery of Lowe’s slowing sales pre-pandemic, and this hazard pay for store associates may just give them more pause for concern.
Why This Matters: The special cash payment matches the prior one Lowe’s made in March to its 300,000 plus employees. It’s not just full-time workers who will benefit from this extra cash flow, part-time and seasonal associates will also get $150 each. Other retailers including Walmart (WMT +0.09%), Target (TGT -0.09%), CVS (CVS -0.77%) and Walgreens (WBA -2.83%) have also given bonuses to workers, or temporarily increased pay due to COVID-19-related demand.
The home-improvement chain’s payments are expected to cost the company $80 million
“The changes we’ve announced underscore our commitment to associates and our recognition of their unwavering support for our customers and communities,” said Ellison. On the outset this seems like a good idea, however, financially this could put more pressure on Lowe’s after it reported mixed fourth-quarter results, featuring weak sales and a dismal 2020 forecast.
Ellison will need to dig deep during this pandemic, into a DIY strategy that can boost sales. Shares of Lowe’s are down more than 11% year to date, even though same store sales rose 2.5%, analysts were looking for an increase of 3.6%. To combat costs, Lowe’s recently shut 34 underperforming stores in Canada and finished shuttering its Mexico business. The company said it expects to have same-store sales growth of 3% to 3.5% in fiscal 2020.
Situational Awareness: The spring is typically the busiest season for home improvement projects, and it’s possible Lowe’s could see a sales boom in DIY and home repairs as people fill their quarantine time by painting walls, fixing woodwork and tending to the garden. If the pandemic doesn’t provide a quick fix to just duct tape over lagging sales, Ellison will need to rely heavily on his previous experience at Target, JCPenney (JCP +28.74%) and the ten plus years spent at Home Depot to continue a corporate turnaround.
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