$500 Million Down the Drain

When Lowe’s new president Marvin Ellison got on his first quarterly investors’ call to discuss the company’s earnings, he said plenty of the right things. He had moved decisively to change his management group, he was focusing on infrastructure — particularly supply chain — and he was shutting down the company’s Orchard Supply small box DIY rounding error chain. All good.

But then he announced the company was taking $500 million earmarked for Cap X and internal investment and instead would be using that money for a stock buyback. These have often proven to be terrible uses of company’s working capital, especially ones that need major –and expensive — fixes to their processes and systems. The short-term kick to the stock is usually more than outweighed by the long-term damage of not investing in your business.

Another case, in my opinion, of Stupid Business Priorities.

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Photo by Public Domain Pictures on Pexels.com

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