ISI Group Comments on Lowe's Store Closure Announcement

ISI Group has published a research report on Lowe's Companies LOW after the company announced its plans to close 20 stores. In the report, ISI Group writes, "LOW announced the closure of 20 stores (27 stores YTD) and affirmed that the store counts for 2012 and beyond would drop to 10-15/yr vs the previous guidance of 25-35. This increases the odds that capex averages $1.25B or lower for the next four years after an uptick to $2bn in 2011. Total cash cost in 2011 is estimated to run $90-$115mn, with the bulk of the charge ($80-100mn) coming from breaking leases. 11 of the 20 store closures announced today were leased stores meaning the cash cost (net of potential sublease income) is $7.2-9mn." ISI Group maintains its Hold rating on Lowe's, which is currently trading up $0.38 from its $20.93 closing price on Friday.