Home-improvement chain Lowe's told thousands of workers this week that their roles were being eliminated and that the company was outsourcing maintenance, assembly and janitorial services, according to the Wall Street Journal.
Maintenance staff and assemblers were notified that they were being laid off, according to employees, and that their roles are going to be outsourced to third-party companies. Every Lowe’s store has several staff members that work in assembly and manufacturing. Workers are being told that they can reapply for other open positions at the company, but they’re not guaranteed the same pay.
Lowe's employed 90,000 full-time and 110,000 part time workers as of February 1. The company has about 2,000 stores in the United States.
The move comes as a sign that new CEO Marvin Ellison is going to cut costs aggressively after the company lowered its profit targets for the year early in 2019.
And the move comes at a time when many traditional retailers are streamlining their operations, as companies like Walmart and Home Depot have also seen pressure from rising hourly wages and a tight US job market. Both Lowe’s and Home Depot are using self checkout lanes to free up their staff for other roles.
CEO Ellison took over last summer and gave some top jobs to his former colleagues from Home Depot. Lowe's closed 47 less profitable US stores last year and shut down Orchard Supply Hardware, a small regional chain that it acquired five years ago.
Lowe's has lagged Home Depot in many metrics over the last few years. Investors have looked at Ellison's arrival as a chance to boost performance and in the company’s most recent quarter, it outpaced Home Depot in sales growth for the first time since 2016.
Regardless, profit margin declined and the company cut its expectations for the year.