Home Depot to shut stores in latest cost-cutting

The Atlanta Journal-Constitution ^ | 05/01/08 | RACHEL TOBIN RAMOS

[kingattax]

So far, 2008 hasn't been a banner year for Home Depot.

In January, the Atlanta-based home improvement retailer laid off 500 people from corporate headquarters.

In February, it announced its first ever year over year sales decline.

In April, it announced the net loss of 970 jobs from reorganizing its human resources staff.

And today, it announced it is closing 15 stores, affecting 1,300 employees. Plus, the Home Depot is suspending the development of 50 stores. The 15 targeted stores are mostly in the Northeast and Midwest, from New Jersey to North Dakota. No Atlanta stores are scheduled to close.

"Closing a store is always a difficult decision because it affects both our people and our

communities," Home Depot CEO Frank Blake said in a statement. "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. ... 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."

The home improvement chain has blamed the slowdown in the housing market and the sluggish economy for its retail woes.

Home Depot will record a $586 million pre-tax charge related to the store closings and the 50 shelved stores. That includes $8 million for severance and $11 million for inventory markdowns. Home Depot hasn't revised its earnings forecast for fiscal 2008 to reflect the $587 million charge. Earnings per share from continuing operations are still expected to decline 19-to-24 percent. Analysts have forecast earnings per share of $1.65 to $1.86 , down from $2.27 a year ago.

Home Depot said it will cut capital spending by $1 billion over the next three years and focus on existing stores, as well as possible share repurchases. Home Depot still expects to build 55 stores in 2008, 36 in the United States. The chain currently has 1,970 U.S. stores.

Ron DeFeo, a Home Depot spokesman, said the 15 stores slated to close will remain open for seven weeks and have liquidation sales. The stores' management teams will be offered new jobs and the remaining employees can apply for jobs at other Home Depot stores. Employees that aren't placed will receive severance pay.

Home Depot stock was up in inter-day trading Thursday to $30.18, up $1.38 over Wednesday's close.

[Antoninus]

I think it has to do with customer service. Lowe’s is much better.

You may be on to something there. I've been lurking around Lowes much more often lately after being routinely ignored/given bad info by the Home Despot people.

[ejonesie22]

Have not seen them yet...

[ejonesie22]

Any major shopping I take to Lowes, but it is 10 miles further away than Home Depot so when I am in a hurry I wind up there, but the day Lowes gets out here I am done with HD.

[Antoninus]

I worked at Home Depot part time for Christmas money years ago and was amazed the store wrote a 2% shrink, or as normal people call it, theft, into the stores budget. As long as the theft wasn’t over 2% of the sales they didn’t care. I then realized that 90% of the “shrink” was employees walking out with items after their shift.

Insider shrink always made up the bulk of it in every retail outfit I've been associated with. Some of them deal with it a lot more harshly than others. In a chain record store I worked at in high school/college, I saw two managers get frog-marched out of the store by "loss prevention" over the span of 6 years.

[abigailsmybaby]

I did too and mine also turned out a mess...even after they came back twice to “fix” it.

[Oldhunk]

My circumstances require me to occasionally shop in perhaps 10 different Home Depots. The thing that drives me nuts is that no two stores are laid out the same. It seems like it’s a crapshoot on how each manager arranges things. Most Lowes stores are organized pretty much the same and you can quickly find the right aisle. And all the crap in the Home Depot aisles is a real bummer.

[Pure Country]

Our Menards always has registers open also, but those seem to be the only people working in the store. I waited 35 minutes one day to get a key made, even had the service desk call for someone to help me. No one ever came, so I went to Lowe’s and got it immediately.

Our Lowe’s has great customer service. The people in the departments seem to know what they are doing and can give decent advice. Menards, on the other hand, is ridiculous and it’s only been open since Jan. You’d think they would try and put their best foot forward for 6 months at least.

[Uncle George]

How many here, who hate Home Depot, also dislike Tony Stewart?????? (hee hee hee hee)

[Sir_Ed]

I saw a Ford commercial the other day. This young, PC blonde, obviously the most brilliant engineer in the Ford hierarchy, starts lecturing us on how we MUST turn Green, and turn Green NOW.

I’ve owned three Fords, an F-100 and two F-250’s, and I would NEVER buy another Ford, based on their stupid Green hectoring alone.

Ed

[bleach]

“All that orange stuff is ugly. Orange is a tough color.”

Unless you’re in the AFC North, then Orange (and black) is a pushover.

[keepitreal]

“Better to go through a reputable local firm or your local long-time hardware store.”

As the owner of a reputable local contracting firm all I can say is AMEN! I’m tired of competing with Home Depot and the clowns it subcontracts the work to. We can’t compete on price. HD buys so cheaply and then forces the subs to take barely anything for the job. When the time comes to take care of warranties, etc, the low-paid subs, if they are even still in business, aren’t going to take care of it because there is no money in it. The cheap business model works great for HD but is terrible for the customer. And local contractors just don’t have the buying power or the coercive power over labor to operate at HD’s price level. However, we take care of business, which is the greatest competitive advantage we have.

[EggsAckley]

These idiots just recently opened, not ONE, but TWO stores in our little county of 300,000+ people. The newest one is a complete joke. They fired 90% of the staff after two weeks. It’s still chaos, after 6 months.

[Eric in the Ozarks]

A relative worked in Menards administration. He said they specifically look for the cheaper “culls” from lumber suppliers and mix them in with better quality pieces. I have bought 2 X 4’s from Menards but always took my time sorting for the ones I brought home.

[LexRex in TN]

Lowe’s is actually 60+ years old—HD is less than 30. HD DID invent the big box format which Lowe’s has done very well with. Lowe’s is far from leaner—they owe substantially more debt than HD does.

I’m not sure that closing less than one percent of under-performing stores is earth shattering news at all. Actually I’m surprised their not closing more. Not enough help at our local HD (Lowe’s either, for that matter), and very few folks who know that they’re talking about.

[Big Horn]

I think it has to do with customer service. Lowe’s is much better.

I think you have a point. I was not satisfied with the help offered when shopping for appliances so bought elsewhere.

[MediaMole]

Someone needs to tell Home Depot that no one needs bedding plants in Wisconsin in early April.

Local stores are just getting around to setting up bedding plant displays while Home Depot is putting their (dying, frostbitten) plants on closeout. (That was my experience last year.)

[VOA]

“Anyone familiar with the free-standing Sears Home and Garden stores?”

I haven’t ever seen one during my time in Oklahoma, California and
now Mid-Missouri.

BUT, I believe “OSH” (Orchard Supply and Hardware?) shops are owned
Sears. OSH was a major chain in California; I don’t know when
Sears Holdings acquired them.
The OSH store I went to in West Los Angles was a passable hardware/garden
shop, even though much smaller in size and less product choice than
the big boxes like Lowes and HD.

http://www.osh.com/Cultures/en-US?ft=true

http://www.osh.com/Cultures/en-US/FAQ

[Hot Tabasco]

I think it has to do with customer service. Lowe’s is much better.

I have a HD 2 miles to the east of me and another one about 3 miles to the west of me. Right in the middle and real close is a Lowes.

Service at the Lowes is far inferior to either of the HD's and what I can't find at Lowes I will find at Home Depot.

My store of choice is now Home Depot......

I suspect that the reason they are closing stores is because they have literally saturated the communities with them........

[discostu]

I’d never heard of Lowes until long after HD had taught me big box hardware stores suck. Then I went into Lowes just to see and said “huh, it’s home Depot in blue”. Didn’t know they’d been around a long time, they don’t seem to be having as many troubles as HD, of course who knows what tomorrows news will hold. I really don’t think there’s room in the market for 2 functionally identical stores, especially not 2 identical stores that aren’t actually good at being what they’re supposed to be. I wonder if they were actually any good before they expanded enough to get to the South West.

I don’t think closing stores will help get workers or get smart workers. Any time I’ve ever asked where something is in an HD or Lowes the answer was always “uh I’m not sure, maybe in {names section on the other side of the store}”. The other thing that always bugs me in those stores is how little selection they actually have, when you finally find where the hammers are they’ve got like 2 kinds of claw and 2 kinds of ball peen, they’ve got 400 of all 4 types but only 4 types. Get over to Ace and in half the space they have 2 dozen varieties, that’s a hardware store, and their employees know where they hammers are and what’s the difference between them.

[politicalwit]

“Sears Appliance & Hardware, formerly Sears Hardware is a chain of hardware stores that carry the whole line of Sears hardware and are usually free-standing or located in strip malls. Typically these stores are about 25,000 square feet (2,300 m²). In 2005, the chain was expanded to include Sears’ full line of appliances.”