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May 1, 2008

Home Depot to Cut Back Store Openings, Will Close 15 Stores

The Home Depot, Atlanta, GA, home improvement retailer, announced it would no longer pursue the opening of 50 U.S. stores in the pipeline – some will be delayed by as much as 10 years.
 
The company also reported it would close 15 underperforming U.S. stores, representing less than 1% of the company's store portfolio.
 
"Closing a store is always a difficult decision because it affects both our people and our communities," said CEO Frank Blake. "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."
 
As a result of the store closings and impairment, the company will record a charge of $186 million, including inventory markdowns of $11 million and severance of $8 million.

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