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Home Depot Shutting Down 15 Stores

Written By Brian Hicks

Posted May 1, 2008





If you’re looking for signs of a weakening consumer, here’s another one. Home Depot has decided to close 15 stores over the next two months.

Poor performance is the reason. It is a dubious first for the renowned big box chain.


From AP by Harry R. Weber entitled: Home Depot to close 15 US stores, cites poor performance.

“Nearly 7 1/2 months after its chief executive said there were no plans to cut the number of its core retail stores, The Home Depot Inc. announced Thursday that it is shuttering 15 of them amid a slumping U.S. economy and housing market. The move will affect 1,300 employees.

The Atlanta-based company said Thursday that the underperforming U.S. stores being closed represent less than 1 percent of its existing stores. They will be shuttered within the next two months.

The stores to be closed consist of three in Wisconsin, two in Ohio, two in New Jersey, two in Indiana and one each in Kentucky, Louisiana, Minnesota, North Dakota, New York and Vermont.

A company spokesman said some of the employees will be relocated, while others could lose their jobs.

Spokesman Ron DeFeo said Home Depot has only closed one of its flagship stores previously because of structural damage.

The company reiterated its intention to open 55 new stores in the 2009 fiscal year.

Due to the store closings, Home Depot will record a charge of roughly $186 million, including inventory markdowns of $11 million and severance of $8 million. It also will record a charge of roughly $400 million related to development costs and ongoing obligations associated with the future store locations that it is scrapping.

New store capital spending will be reduced by $1 billion over the next three years, Home Depot said.

On Sept. 21, 2007, Home Depot CEO Frank Blake told The Associated Press that the company 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.

Since then, the economy and the housing market woes have grown worse, and Home Depot has announced several rounds of job cuts.

In December, Home Depot said it would cut 950 jobs and close three call centers that handle orders for home installation. The next month, Home Depot said it would cut 500 jobs at its headquarters.”


By the way, yesterday’s GDP numbers were not all that they were cracked up to be.

That .06% growth in the first quarter was largely the result of three key, but dubious factors.

  1. Deficit spending increased. Big surprise.
  2. Inventories grew.
  3. An assumption of a 2.6% inflation rate, when everyone knows it’s 4%.

So in short, the fix on this one was in.  Without them it’s negative.

So while we may not have reached the technical definition of a recession, that truth is that yesterday’s GDP report does confirm that economic activity is either flat or declining outright. But we knew that already. Didn’t we?

How else do explain it when Home Depot stores are closing?