The Home Depot Inc., the biggest U.S. home improvement retailer, said on Thursday that it will close 15 underperforming stores, and drop plans to open 50 additional locations, affecting 1,300 employees mostly in the Midwest U.S.
The Atlanta-based retailer will take a charge of about $186 million related to the closings, the company said in a statement. Managers and assistant store managers will be offered other management positions at the company.
Shares of the company rose 4.83 percent, or $1.39 to $30.19 in mid-day trading on the New York Stock Exchange.
The company also reiterated its intention to open 55 new stores in the current fiscal year, including 36 new stores in the U.S.
About 50 U.S. stores which had been in the company's new store pipeline will not open, with Home Depot taking a $400 million charge related to costs and ongoing obligations associated with those locations.
The company will also reduce the money it allocates to new store spending over the next three years by $1 billion. Total capital spening for the current fiscal year will be about $2.3 billion, down from $3.6 billion last year.
This is a continuation of our disciplined approach to capital allocation that we outlined last year. We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales. Our capital efficiency model will also provide improved returns for our shareholders through dividends and share repurchases, said Frank Blake, chairman and chief executive.
Total charges for the moves will be $586 million, of which $547 million will be recognized for the first quarter of fiscal 2008, the company said. The rest will be spread out in the current year and fiscal 2009.
The series of actions will result in diluted earnings per share from continuing operations which are expected to decline by 19 to 24 percent in the current fiscal year.
The following is a list of the stores to be closed that was released by Home Depot:
#2015 East Fort Wayne, Indiana
#2032 Marion, Indiana
#2310 Frankfort, Kentucky
#379 Opelousas, Louisiana
#2819 Cottage Grove, Minnesota
#6901 East Brunswick, New Jersey
#6904 Saddle Brook, New Jersey
#6171 Rome, New York
#3702 Bismarck, North Dakota
#3874 Findlay, Ohio
#3865 Lima, Ohio
#4552 Brattleboro, Vermont
#4932 Beaver Dam, Wisconsin
#4933 Fond du Lac, Wisconsin
#4913 NW Milwaukee, Wisconsin