Lowe's expands benefits, employee bonuses
Lowe’s announced last week a one-time bonus up to $1,000 for more than 260,000 eligible full- and part-time hourly U.S. employees across its stores, customer support centers, contact centers and distribution centers. The home improvement retailer also said it was expanding maternity and parental leave as well as adoption assistance.
The bonuses, which come a week after the company’s board authorized a new $5 billion stock repurchase program, is on top of the home improvement retailer’s existing store-level bonus policy, according to a company press release.
Also the previous week, Lowe's announced the hire of more than 53,000 full-time, part-time and seasonal employees, significantly more than the 45,000 in-store seasonal hires last year, which came amid corporate layoffs.
Several U.S. companies, including Walmart, have announced wage boosts and bonuses in recent weeks, and many are at least suggesting that a significant reduction in the corporate tax rate has made it possible. Several others have also announced share buybacks, and, although tax reform doesn't make it into the press release, many observers and policymakers had predicted that the law would spur the kind of repurchase plan announced by Lowe's.
Lowe’s last week said that it estimates the tax bill would result in additional net tax expense of approximately $75 million in the fourth quarter of fiscal 2017. That charge plus the one-time bonus announced Thursday are expected to hit the company’s 2017 fourth quarter diluted earnings by about 14 cents per share. For fiscal 2018, however, the company said the net impact of the tax bill on its tax provision and cash taxes paid "will be positive."
While tax reform is freeing up cash, any decision to offer higher wages, better benefits and bonuses could have at least as much to do with rising minimum wage requirements nationwide. States and cities are increasingly leaving the $7.25 federal minimum in the dust.
New minimum-wage rates in 18 states and 19 cities, ranging from as much as $12 to $15 an hour, took effect in the new year, according to the National Employment Law Project. Later this year, another three states and 18 cities and counties are set to increase their rates as well, with other campaigns underway in 14 states and three cities, all pushing for rates in the $12 to $15 range, according to a NELP report.
While Lowe's, like Home Depot, is benefiting from a strong U.S. housing market, it's under activist shareholder pressure to step up its game against its rival. "Lowe's needs to work harder to build its brand presence and recall, something that recent advertising and marketing have begun to address," GlobalData Retail Managing Director Neil Saunders told Retail Dive in an email. "The next step should be to think about the areas where Lowe's can differentiate from Home Depot and win market share."
- press release Lowe’s Expands Benefits and Announces Cash Bonus
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