UPDATED: 10:56 a.m. May 02, 2008
Home Depot to shut stores in latest cost-cutting


The Atlanta Journal-Constitution
Published on: 05/01/08

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.

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

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

And Thursday, it announced 15 stores will close, affecting 1,300 employees. Home Depot is also shelving 50 planned new stores.

The 15 stores that will close are mostly in the Northeast and Midwest. None are in Atlanta.

"Closing a store is always a difficult decision because it affects both our people and our communities," Home Depot Chief Executive Frank Blake said in a memo to employees obtained by The Atlanta Journal-Constitution. "At the same time, the stores we're closing weren't meeting our expected returns and weren't projected to anytime soon."

He told employees that after reviewing all 1,970 U.S. stores, no others are being closed.

The closings show the company is reeling from the "perfect storm" of higher gas prices, higher food and health care costs and the real estate bubble bursting, said Wayne Hood, managing director of BMO Capital Markets, an equity research firm.

Wall Street seemed to approve Home Depot's fixes.

"The stock is up 5 percent today, and the market is up 1.5 percent," noted Hood, who is based in Atlanta.

Home Depot's shares closed at $29.87, up $1.07.

The bad news for Home Depot (and rival Lowe's), Hood said, is that the U.S. market is saturated with stores and the housing market is flooded with inventory, leaving little opportunity for growth. Store closings and layoffs "are not atypical to see when you have a weak economy," he said.

Home Depot will record a $586 million pretax charge related to the closings and the 50 shelved stores. Home Depot didn't publicly revise its earnings forecast for fiscal 2008 to reflect the charge.

But in the memo to staff, Blake said: "We will record a write-off to our first-quarter earnings. While this will reduce our earnings per share for the year, it does not mean that we're losing money or that the company is in any sort of financial trouble."

Home Depot said earnings from continuing operations are expected to decline between 19 percent and 24 percent, for earnings per share of $1.73 to $1.84.

By slowing new store growth, Home Depot will cut capital spending by $1 billion over the next three years. The money will be freed up to improve existing stores and possibly for share repurchases. Home Depot still expects to build 36 U.S. stores this year.



Home Depot will close stores in:
• East Fort Wayne, Ind.
• Marion, Ind.
• Frankfort, Ky.
• Opelousas, La.
• Cottage Grove, Minn.
• East Brunswick, N.J.
• Saddle Brook, N.J.
• Rome, N.Y.
• Bismarck, N.D.
• Findlay, Ohio
• Lima, Ohio
• Brattleboro, Vt.
• Beaver Dam, Wis.
• Fond du Lac, Wis.
• Milwaukee, Wis.

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Comments

By k.

May 5, 2008 12:56 PM | Link to this

Wow..it seems like most people are in agreement that the Depot is a pretty bad place to work. I worked there for 13 years...DO NOT ASK ME WHY I STAYED THAT LONG? Actually it was only the money. I woke up every day dreading to go to work. The management was cluless, rude, and carried on political ********. If you wer not friends with someone on management staff that would help you out if needed, you were screwed. The hours were ridiculous and if more people complained I am sure there could be a law suit or two out there for overworking with barely any hours between shifts. The management work those long hours yes...only getting paid for 40...yes...but believ eme they are making up for it in other ways....if you worked there you know all the merchandise that goes out those doors unpaid with mamgement acknowledgement...it is pretty scary...oh believe me they are getting reimbursed in other ways.....no one is going to work that many hours, be treated like crap for free...13 years ago when I started there the stores were a pleasure....the employees were all trained and knowledgeable....and it was a caring company....Bernie & Arthur were genuinely good guys, they even came to my store a few times...I am sure they are dissapointed....the compant got to big for its britches and we all became just a number....98% of wmployees are misreable and it shows with their customer service....Its a sad story but not surprising...

By JOJO

May 5, 2008 11:00 AM | Link to this

I worked at the store 3 years before i left for a better job due to unqualified and rude managers. unfortunately for me, my wife also works for Home Depot but in another store as a manager.The minimum hours a Manager is supposed to work is 55 hours a week, even though they are only paid for 40 hrs a week! this is actual fact! Home Depot over works its management staff all the time and to make matters worse they have asked all managers to work 6 days a week bringing the minimum hours to 66 hours a week but only gets paid for only 40!
The point am trying to put across is that The Home Depot has an Unhappy management staff! who are always sad and very very tired and frustrated! they are always seen taking their anger and frustrations on associates and that really kills the morale in the stores leading to poor customer service!
In one month alone 4 managers in one district had to quit their jobs because they could not take the toll any longer.I have also asked my wife to quit and look for a part time job or stay home after working 5 years as a manager.
Share holders should look into this poor management from the coperate level to check that the Home Depot does not lose any more value of its stocks, by giving the management staff a break!! to ensure quality customer service and may be, just maybe it wont have to close any more stores!

By Jesse

May 5, 2008 9:20 AM | Link to this

I have worked for home depot for two years and i have watched as it has declined but you still have stores out there that do very well and a management team that knows what they are doing. You can't blame the political team in office right now for HD's decline because then you have to blame them for everything that you have done in support of that with out knowing you have. Dave you are and idiot because when you lose your job house kids die of starvation who are you going to blame...bush no beacause you didnt vote for him you liberal p^%$y. think before you speak and learn that blame falls upon all and just individuals

By Tom

May 4, 2008 10:38 PM | Link to this

Home Depot may have many issues including lack of associates in the stores, poor customer service and long lines at the registers.
But we shop both Home Depot and Lowes and we almost always find the better prices at Home Depot. If we bought 100 of the same items, I would bet Home Depot would be cheaper on 80 of them.
The problem came years ago when Nardelli cut all of those fulltime positions in favor of part time workers. It is hard to increase payroll hours once they have been cut.

By PT Worker

May 4, 2008 9:11 PM | Link to this

I've worked for Home Depot for 6 years as a part-time sales associate and the company is a disgrace! Management is rude, verbally abuse, and generally idiotic with no clue as to how to run a store. They kill employee morale and aggravate customers. Workers can never do good nor can they ever do enough. Change the crappy management and maybe, just maybe, you'll have employees that care enough about their stores and the company to drive sales and push customer service. Would you really care about sales if you were just aggravated by a manager over petty nonsense?

By HDTex

May 4, 2008 7:27 PM | Link to this

For all the bad news coming out of HD, I see that good old Frank didn't say "no" to being handsomely rewarded for his incompetence. Don't be fooled...he's Nardelli in sheeps clothing.

By Firechikrdy2roll

May 4, 2008 11:20 AM | Link to this

I have worked at Home Depot for almost a year now. Day in and day out I see the same issue. It does not have to do with how corporate is running things. What I do see if (customers and employees alike) wanting something for nothing. What ever happened to WORK ETHIC! You work an honest hour for an honest hour, or you get what you pay for? What I do have to say for Home Depot is they will bend over backwards for a customer, but won't do the same for an employee, I think there is middlegound there somewhere. Learn to say No, but also learn how to retain your crew. You can't stand on your feet in a desolving economy and repeatedly have the rug pulled out from underyou financially. People if you want the options available to you in your economy, pay the price available, support your local economy and be a good American don't ask for the pie at the price of a slice.

By Mike

May 4, 2008 10:51 AM | Link to this

It does not take a high-priced "consultant" to see Home Depot's problems. No customer orientation at all. It is impossible to find help, the check out line (yes, singular line), if there is a cashier, is deep with the few customers there. The self-check-outs, retailers' latest swindle to get unpaid help, are a joke with their regular breakdowns. We used to love Home Depot and avoid Lowes during the two high-end houses we built and major finish-out project. Like many others we know, Lowes is where we go now. I cannot tell if Lowe's improved or Home Depot is so bad that a monkey in a store vest...anything...looks good now when compared to today's Home Depot.

Nardelli, the ultimate incompetent and proof the Peter Principle is alive and well, ruined a great store. He should be imprisoned for that, not rewarded. I cannot believe he is former GE Sigma Six person. Boy did Welch hire a moron! Not one of Western Illinois University's stars. Moreover, I lived in Rockford with him, too. Now Nardelli is doing to Chrysler what he did to Home Depot. Chrysler will soon be gone. Get out the Vaseline! I hope he kisses first.

By men among boys

May 4, 2008 10:29 AM | Link to this

By:15 years plus- WALL STREET has a bad taste in their mouth about Home Depot if you ever think the 401k offered through HD is going to supplement your retirement,well you get the message....You have a couple of key positions in the store where they pile all the responsibility on and the rest of the ******** walk around looking for those few..If it wasnt for the "RTV" clerks the store would fall apart yet the garbage (usually asst. man.s)spend most of the time worrying about staying clean...

By Dee

May 3, 2008 8:22 PM | Link to this

I worked for Home Depot but had to get out due to poor management. Poor Management and poor customer service was all that seemed to be available to the customers that came in. I didn't want to be a part of that but I was also watching as sales dropped, and the specialist were asked to do more. How can you get more sales when there was no in the store to buy, because the customer service was so bad. The management allowed the total store morale to drop and seemed to either, not care or didn't want to address it with the associates. That showed with how the associates in general took care of the customers. It is too bad. What most of the associates are saying "Our store won't close". Corporate wouldn't do that. If the store is not hitting it $$, it will be the next to do in the next round of closures. If anyone is noticing, there is no words spoken that THD Corporates won't continue to do this. More stores are on the chopping block. The public will know about the next closing before the associates will. That is "Corporate" for you. Good Luck I am glad I left when I did.

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