Former Home Depot division struggling
HD Supply will lay off 350 employees and consolidate 25 branches in its continuing effort to stem losses related to the decimated residential and commercial construction industry, according to a filing with the Securities and Exchange Commission.
Since the fourth quarter of 2008, the Atlanta-based company and former Home Depot division has laid off 4,500 employees nationwide and closed or consolidated 210 branches. The company expects to incur $45 million in costs to reorganize its operations.
Anna Stevens, a spokeswoman for the company, said it now has 16,000 employees in 800 locations. HD Supply posted a $267 million net loss for the third quarter on $1.9 billion in net sales, which was down 25 percent from the same period a year ago. The report was issued on Tuesday.
The company's revenues declined due to the slowdown in the "residential, commercial and municipal construction markets," Stevens said.
In 2008, the company had 20,000 employees, said CEO Joe DeAngelo. The company had $9.8 billion in net sales and an operating loss of $789 million.
HD Supply was the brainchild of former Home Depot CEO Bob Nardelli, who built what was then a $12 billion division by buying up lumber and other supply companies over several years.
Current Home Depot CEO Frank Blake sold the division in 2007 for $8.5 billion, saying that the division had distracted Home Depot from its flagship home improvement stores.
HD Supply was bought by three private investment firms: Bain Capital Partners, the Carlyle Group and Clayton, Dubilier & Rice.
Home Depot retains a 12.5 percent ownership stake in the supply company but had to write down $163 million from the value of that investment earlier this year.
In October, Bloomberg reported that Moody's Investors Service downgraded HD Supply's credit rating for the second year in a row. Moody's said that even though the company had $700 million in cash, HD Supply was feeling the effect of the recession.
The company has nearly $5.8 billion in long-term debt, according to its third-quarter report issued Tuesday.
HD Supply still has 10 "lines of business," including waterworks, utilities and facilities maintenance, the company emphasized on Wednesday.