(Reuters) - Lowe’s Cos Inc (LOW.N) on Monday said its chief executive officer is retiring, the latest executive departure as the home improvement chain tries to move out of the shadow of larger rival Home Depot Inc (HD.N) that has outperformed it for years.
Shares of Lowe’s rose as much as 7.8 percent to $90.33 after Robert Niblock said he would step down once a successor was found.
The No. 2 U.S. home improvement store has struggled to control margin pressures and its same-store sales growth has trailed Home Depot’s for many years, weighed down by a focus on do-it-yourself customers compared to Home Depot’s core customer base of professional contractors who bill more.
Lowe’s underperformance has also attracted shareholder activism.
Hedge fund D.E. Shaw Group secured two independent board seats after taking a nearly $1 billion stake and agitating for change. D.E. Shaw, best known as a quantitative hedge fund, started carving out an activist practice last year.
D.E. Shaw portfolio manager Quentin Koffey said in a statement that Niblock leaves the company in “excellent condition” to execute on value creation opportunities.
In the past year, Lowe’s stock gained 1.7 percent, in contrast to Home Depot’s near 17 percent rise.
Telsey Advisory Group analyst Joseph Feldman said, “a transition will be well received by investors, given their pent-up frustration with the company, and could be the first step toward improved operational execution.”
Niblock’s departure follows the retirements of Chief Financial Officer Robert Hull and Chief Operating Officer Rick Damron over the past year.
Lowe’s said its board has formed a six-person committee to find a successor, led by D.E. Shaw-backed director David Batchelder.
“After a 25-year career at Lowe’s ... I am confident that it is the right time to transition the company to its next generation of leadership,” Niblock, who is also the chairman and president of the board, said in a statement.
Since Niblock took the top job at Lowe’s in January 2005, the company’s sales have risen 88 percent to $68.62 billion, while the stock has gained more than threefold.
Lowe’s shares closed 6.6 percent higher at $89.30.
Reporting by Aishwarya Venugopal in Bengaluru; additional reporting by Liana B. Baker; editing by Saumyadeb Chakrabarty and David Gregorio