Orchard Supply Hardware stores to all close by end of fiscal year

SANTA CLARA, Calif. (KTVU) - Despite a second quarter sales increase of 7 percent compared to the same time last year, Lowe's executives announced they're closing all of the company's Orchard Supply Hardware stores at the end of the fiscal year.

That chain was started in San Jose during the grips of the Great Depression, as a cooperative between farmers struggling to stay afloat.

In 2013, "OSH" as it's called, was purchased by Lowe's. The ensuing business is very apparent in San Jose.

Lowe's bought in to what seemed like a good bet, even spending money to move locations of its store on Royal Avenue. But that money and much more has been sent down the drain.

There are normal business hours Wednesday at all Orchard Supply Hardware stores, but definitely not a normal atmosphere. Early arriving customers were bewildered by news the comfy, convenient, hardware store is headed out of business.

"This is a very sad I've been shopping in that store over there and now this one and the other ones around the Bay Area as long as I've been here," said 34-year-customer Gill Thacker of San Jose.

Executives with Lowe's, OSH's parent company. says despite hiring signs, going out of business sales start Thursday. The original OSH was on Bassett Street in San Jose back in 1931. Much has changed with the street, and the company.

OSH went on to grow to a chain of 99 stores in three states now all slated to be shuttered by the end of the company's fiscal year. Officials informed 4,300 employees of their pink slips in face-to-face meetings. Prudence Hernandez has worked here 17 years.

"What am I gonna do? But we'll see…I'm probably going to apply for Lowe's," said Hernandez.

Lowe's executives declined requests for an on-camera interview and instead released a statement which reads in part, "We're working hard to make this transition as smooth as possible for our associates and our customers. We will be retraining our associates through the closing process and are encouraging them to apply for open positions at Lowe's stores, where they will receive priority status."

Company officials say the closing comes so Lowe's can get back to "retail fundamentals" by "simplifying the organizational structure." Lowe's was founded in 1946 and is based in Mooresville, North
Carolina.

"Yeah it's gobble-dee goop, but what really happened is they screwed up," said Dr. Robert Chapman Wood, a strategic management professor at San Jose State University's College of Business.

He likens Home Depot to an 800 pound gorilla on the retail landscape. And says Amazon weighs in at 600 pounds. "OSH" was squeezed by a war of business titans, and in the interest of self-preservation, Lowe's decided to cut bait and get its own corporate house in order.

"Somebody decided that OSH was a small problem in a company with really big problems. And so they gotta close it," said Dr. Wood.

The closing doesn't entirely leave loyal customers in a lurch. Home Depot's are ubiquitous. But it's not the same and yet another sign the city where a Great Depression-era store survived is become a place less familiar to folks who just like their long-time corner hardware store.

"It appears that's not good enough to stay in business these days," said Thacker.

Orchard Supply has become such a staple in the South Bay, "History San Jose" has an old railroad boxcar on its grounds that bears the company's logo. The boxcar used to sit near the store on Royal Avenue, and served as a second signage. And if you remember "OSH" publishing an annual calendar, you should also know it too will end as the doors close February 2019.