Home Depot will eliminate 7,000 jobs

After nearly 20 years as an experimental concept, Expo Design Centers are closing — part of cuts at parent Home Depot that will shed about 2 percent of its work force, or 7,000 jobs.

With their shiny kitchen faucets, glittering chandeliers and stone and tile made around the world, the Expo concept just didn’t hold its own in the current economy.

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Home Depot will close its 34 remaining Expo stores. Two of them are in metro Atlanta, including this one in Alpharetta.

Vino Wong / vwong@ajc.com

HOME DEPOT POLICIES
FOR EXPO CUSTOMERS
Throughout the process of closing its EXPO stores, The Home Depot is committed to meeting the needs of its customers. The company will complete any construction projects that have been started. In cases where product has been ordered but the construction project hasn't been started, the company will refund the price of installation and the design retainer. The customer can then arrange for their own installation. In cases where a design retainer has been paid but product has not yet been ordered, the customer will receive a full refund of the design retainer, as well as a 10%-off coupon that can be used for a product and services discount at a local Home Depot store. All special orders will be completed. Any back orders will be refunded to the customer. Customers with questions should contact their local EXPO or one of the company's call centers at 1-800-259-1042 or 1-800-797-1745.
Source: Home Depot

• PDF: Home Depot CEO's memo to employees

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Home Depot said Monday it is pulling the plug on its high-end decor showrooms because their profitability took a startling dive into the red at the end of last year.

Starting Tuesday, the remaining 34 stores, including two in Atlanta, will begin liquidating, slashing prices by 10 to 30 percent. The stores are expected to close by early April. Customers with pending installations will have their projects finished, or receive full refunds on products and design fees.

Felix Waldow, speaking outside the Expo store in Alpharetta, said he’ll miss it. Expo won’t honor a design contract he purchased on Jan. 16, but his fees will be returned. Several other customers entered the store Monday, but left after realizing the markdowns hadn’t started yet.

The mood at the store at Perimeter Center was somber as employees hugged and many were talking on their cellphones. They found out their store was closing at a mandatory staff meeting Monday at 8 a.m. that was hastily scheduled over the weekend.

Closing Expo will stop the red ink from flowing — Home Depot estimated the concept would lose $80 million in 2009, after an operating loss of $50 million in 2008.

“Even during the housing boom, it never reached our goals,” Home Depot CEO Frank Blake said in a call with analysts Monday.

Home Depot also announced on Monday it will close 14 specialty stores including five YardBirds in California and cut 2,000 store support jobs — including 500 at the Atlanta headquarters. The cuts are in response to an expected 8 percent sales decline in 2008. Home Depot will announce 2008 result on Feb. 24.

The retail giant has been slowly trimming staff since last year, when it axed 500 headquarters positions, 970 human resources jobs nationwide and closed 15 stores.

“Our core business is $8 billion smaller than we were just two years ago and we expect additional pressure in 2009,” Blake said in a memo sent to staff on Monday. Chief Financial Officer Carol Tome, in a telephone interview, said her staff has shrunk to 600, from a high of 1,200.

The staff cuts, a total of 7,000 in this round, amount to 2 percent of the total work force. Ten percent of the corporate officer ranks are also being cut, or 12 to 15 people, Tome confirmed.

The closure of the Expo stores is another sign that the luxury retail segment is struggling in the current economy.

When times were good — back in 2007 — Expo benefitted. That was the division’s best year, Tome said. But success came in fits and starts.

The Expo concept was founded in 1991 in San Diego as a way to put several showrooms under one roof, from kitchens to bathrooms to floors. “There was nothing else out there like it,” Tome said.

The idea slowly germinated — only seven stores were built in the 1990s. Then earlier this decade, new leadership at the company envisioned a merchandising paradise for high-end decor, and 50 Expo stores sprouted nationwide. In 2005, Home Depot closed 20 of those stores because many were too close together. But by 2007, the division had its most profitable year.

“We got rid of the cost structure that was dragging down the profitability,” said Tome. “And Expo was riding the housing wave.”

Profitability hit the skids last year, as the bottom dropped out of the housing market and bank credit became scarce.

The $920 million division of Home Depot showed as much as a 30 percent decline in sales during one week in 2008, compared to the same week in 2007, she said. “Demand has just fallen by the wayside,” she said.

Analyst David Schick, managing director of Stifel Nicolaus’ retail research group in Baltimore, said, “What’s changed is the high end, not just at Home Depot Expo but at other luxury companies we cover. The rate of change is far worse at the high end.”

Schick praised Home Depot’s cuts as “rational” thinking. He said the chain had to face hard truths about slowing growth even before the economic downturn.

“We want to look at companies admitting how bad things are instead of not looking at it,” said Schick. He said it shows Home Depot is “dealing with reality, rather than hoping things get better.”

— Photographers Vino Wong and Joey Ivansco and staff writer Michelle Shaw contributed to this article.