Home Depot to close 15 stores
Home Depot will close 15 underperforming U.S. stores, with the loss of up to 1,300 jobs, and will cut back on store expansion plans.
Home Depot said the moves will cost $586 million in charges, $547 million. It hopes the revised expansion plan and store closures will improve free cash flow, provide stronger returns for the company and allow it to invest in existing stores.
For the current financial year, Home Depot said it plans to open 55 new stores, including 36 new stores in the United States. Starting in the 2009 fiscal year, Home Depot plans to grow square footage by about 1.5 percent per year.
However, the company will no longer open 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. Home Depot will record a charge of $400 million related to capitalized development costs and ongoing obligations associated with those future store locations.
“Closing a store is always a difficult decision because it affects both our people and our communities,” said Frank Blake, Home Depot chairman and CEO. “But, as with our decision to slow future store growth, this is the right decision and will bring long-term benefits to our associates and to our shareholders. We put our real estate projects through a tight capital efficiency model. This model prioritizes locations that make the most efficient use of capital, reduce cannibalization and drive higher returns. By building fewer stores, in the best locations, and making sure our existing stores are profitable, our company will be in a much stronger competitive position.”
