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Home Depot to close 15 stores within the next few months

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Home Depot to close 15 stores within the next few months

Old 05-01-08, 08:24 PM
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Home Depot to close 15 stores within the next few months

From Forbes:

Home Depot Takes Wrecking Ball To Stores
Maurna Desmond, 05.01.08, 6:00 PM ET

The economy has been hurting since the subprime mortgages began their tumble toward foreclosure, taking anything housing related, especially home goods, along for the bumpy ride.

On Thursday, Home Depot announced that it was shutting down 15 of its underperforming flagship stores. The mercy killings are supposed to wrap up in the next few months with 1330 employees being axed or reassigned. Wall Street rallied after the tough love announcement. Home Depot added 3.7%, or $1.07, to $29.87 at the close of trading in New York on Thursday.

Excluding charges, the company said its earnings per share from continuing operations will decline by 19% to 24% for fiscal 2008. Home Depot releases its first-quarter results May 20.

It was only 4 1/2 years ago that Home Depot former Chief Executive Bob Nardelli said that the retail chain could sustain "unlimited growth" without significantly lessening sales at established stores. Those boom times are long gone.

In a bleeding real estate market and with new management at the helm, the Atlanta-based company has pulled back on expansion plans and is excising vestigial parts. The company said it still plans to open 55 new stores in the 2009 fiscal year, though it will nixed plans to open 50 other U.S. stores that have been in its new store pipeline.

"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," said CEO Frank Blake, who took over for Nardelli in January 2007.

These tough calls weren't in the game plan a year and a half ago. In September 2007, it had been reported that Blake said he had no plans to make any broad-based job cuts or reduce the number of its core retail stores in the face of a persistent housing slump that wasn't expected to improve anytime soon.

In December, Home Depot said it would cut 950 jobs and close three call centers that manage orders for home installation. In January, Home Depot said it would cut 500 jobs at its headquarters.

Home Depot has sought over the last year to focus more on its core stores. In August 2007, it sold its wholesale distribution business, HD Supply, to a group of private equity firms for $8.5 billion.

The store closures with cause charges of $186 million, including inventory markdowns of $11 million and severance of $8 million. It also will record a charge of $400 million related to development costs and ongoing obligations involving scrapped future store locations.

"Demand will remain somewhat depressed for the next several years, especially in the U.S.," said Zahid Siddique, a building products analyst with Gabelli & Co. "I don't think there's really any incremental benefit from opening these new stores."

The company said that new store capital spending will be lowered by $1 billion over the next three years.

Home Depot operates 2,258 stores in the United States, Canada, Mexico and China.

Home Depot rival Lowe's revealed plans in March to delay nearly 20 slated new store openings in areas hit hardest by the flimsy housing market and stubborn credit crunch. The delays are based on where we think we can be most successful in 2008, said Lowe's spokeswoman, Chris Ahearn. Although the Mooresville, N.C.-based retailer hasnt broken down stalled store plans on a state-by-state basis, Ahearn mentioned California and Florida as areas where declining home values have strained the home improvement market.
The list:

- Lake Avenue, Fort Wayne, Indiana
- Marion, Indiana
- Frankfort, Kentucky
- Opelousas, Louisiana
- Cottage Grove, Minnesota
- East Brunswick, New Jersey
- Saddle Brook, New Jersey
- Rome, New York
- Bismarck, North Dakota
- Findlay, Ohio
- Lima, Ohio
- Brattleboro, Vermont
- Beaver Dam, Wisconsin
- Fond du Lac, Wisconsin
- N.W. Milwaukee, Wisconsin

According to one article, the going-out-of-business sale at the Ft. Wayne store begins this Saturday. Not sure about the others...
Old 05-01-08, 09:00 PM
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I am REALLY surprised the one close to me isn't on the list. It's dead center in the state of urban decay. Everything else is closing up all around them.

On NPR this morning they had some expert that claimed right now this country has 19 square feet of stores (in general) for each person when it really only takes 10 square feet of shopping space to sustain one person.
Old 05-01-08, 09:26 PM
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15? That doesn't seem like a whole lot or a big deal.
Old 05-02-08, 12:34 AM
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Originally Posted by fumanstan
15? That doesn't seem like a whole lot or a big deal.
I don't even see why it's news. Store closings like that happen all the time, even when the economy is good.

And why would any of them have going out of business sales? They can't ship the remaining stock to their other 7000 (or however many) stores?
Old 05-02-08, 01:09 AM
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Originally Posted by printerati
From Forbes:


- Findlay, Ohio
- Lima, Ohio

Ah damnit.....this mean more business at work for me at lowes....
Now this will be even less time I get to read my books and magazines and play Tetris.
Old 05-02-08, 02:23 AM
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from what ive read and heard, this is a big deal because home depot has never closed a store due to sluggish sales. just pointing it out.
Old 05-02-08, 10:18 AM
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Wow three of the 15 are within 50 miles of me. But hey the one I generally go to is still going to be open.
Old 05-02-08, 10:43 AM
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The one in Saddle Brook, NJ has about 5 other stores in a 5 mile radius anyway.

That store originally wasnt even a Home Depot. It was some other home store owned by Home Depot which failed in a good economy so they turned it into a Home Depot.
Old 05-02-08, 11:20 AM
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I rarely go into hd if I can avoid it. I can never find anyone to ask a question or get any kind of service. It's like the place is diserted. I never seem to have that problem at lowes. So, I'm surprised they've lasted this long and are not closing more stores.
Old 05-11-08, 06:44 PM
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I just had a brand new store open up on Thursday about 2 miles from my house.
Old 05-11-08, 10:44 PM
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Originally Posted by BigDaddy
I just had a brand new store open up on Thursday about 2 miles from my house.
It would suck if this is one that closes next Tuesday....
Old 05-16-08, 03:15 PM
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Originally Posted by kakihara1
Wow three of the 15 are within 50 miles of me. But hey the one I generally go to is still going to be open.

Maybe thats why they are closing?
I would think they would close the lowest revenue producing stores first, followed by the lowest revenue producing stores among stores within a certain distance from each other.

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