HOME DEPOT CLOSING ALL
EXPO DESIGN CENTER STORES
ATLANTA-- The Home Depot will close all 34 of its Home Depot Expo Design Center stores, five YardBirds stores, two Design Center Stores and seven HD Bath remodeling stores, according to the company. None of the company’s “Orange Box†core retail stores are closing.
In explaining the closing of the Expo stores, Home Depot noted that the Expo business has not performed well financially and is not expected to at anytime soon.
“Even during the recent housing boom, it was not a strong business. It has weakened significantly as the demand for big ticket design and decor projects has declined in the current economic environment. Continuing this business would divert focus and resources from the company's core ‘orange box’ stores,†the company said.
The Expo stores will close over the next two months. The closings will impact approximately 7,000 associates, or approximately 2% of the company’s workforce, the company said.
"Exiting our Expo business is a difficult decision, particularly given the hard work and dedication of our associates in that business and the support of our loyal customers," said Frank Blake, chairman and CEO. "At the same time, it is a necessary decision that will strengthen our core Home Depot business."
Throughout the process of closing its Expo stores, the company said it 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.
Home Depot also announced that it is restructuring support functions to better align the company's cost structure with the current economic environment. This includes continuing its shift to a region- and district- based support model in various field functions and reducing headcount in administrative functions in the company's store support centers.
These support reductions will impact approximately 2,000 associates and will result in a 10% reduction in the company's officer ranks. They will not impact any customer-facing positions in Home Depot stores.
Home Depot is also initiating a salary freeze among all officers. But, it will continue to offer merit increases to non-officer associates, as well as earned bonuses and the company's existing 401k matching contribution for all associates, including officers. The company will offer severance, earned bonuses and other benefits to all impacted associates.
"We're very fortunate that the soundness of our company lets us live our value of taking care of our people, even in this time of unprecedented economic hardship," Blake said. "These changes will make us a stronger company and will allow us to continue to grow associate employment over the long term to benefit our customers."
Charges Related to Restructuring
The Company anticipates taking a total pre-tax charge due to these actions of approximately $532 million, of which approximately $390 million will be recognized in the fourth quarter and the remaining $142 million will be recognized in 2009 and beyond. The charge consists primarily of fixed asset write-offs, lease reserves on closed stores, severance and store closing costs. The cash component related to severance and store closing costs is projected to be approximately $153 million over the next twelve months, and is expected to be offset by cash received for liquidated inventory.
These actions should benefit fiscal 2009 earnings before interest and tax by approximately $305 million, according to Home Depot. The benefit to earnings is primarily a result of payroll savings and operational improvements from the business exit.
HD Supply
The Company announced that it will take two charges in the fourth quarter related to its sale of HD Supply in 2007 and its ongoing equity interest in that business. First, it will record a charge of approximately $55 million, net of tax, to be reflected in discontinued operations primarily related to the working capital dispute related to the sale of the business. The cash component of the HD Supply charge is $22 million. Second, it will record a pre-tax charge of $163 million that will be reflected in other expense for a write-down of the Company's investment in HD Supply.
Updated 2008 Sales and EPS Guidance
The company confirmed that it expects fiscal 2008 sales and earnings per share from continuing operations to decline by 8% and 24% respectively before the charge associated with today's announcement and the store rationalization charge recognized earlier in the year.
Fiscal 2009 Outlook
Looking forward, Home Depot anticipates continued weakness in sales related to the broader economic downturn, but will continue to invest in customer service in its core Home Depot stores, while optimizing its capital allocation. The Company plans to reduce capital expenditures to approximately $1 billion in fiscal 2009 and will open 12 stores. Fiscal 2009 sales and earnings per share guidance will be provided during the Company's fourth quarter earnings call on February 24, 2009.
In fiscal 2007, The Home Depot had sales of $77.3 billion and earnings from continuing operations of $4.2 billion. The Company employs more than 300,000 associates. The company operates 2,274 stores.
The following EXPO, Design Center and YardBIRDS stores are scheduled to close:
EXPO
Arizona
Scottsdale (7000 East Mayo Blvd, Phoenix, AZ 85054)
California
Anaheim 1011 (N Tustin Avenue, Anaheim, CA 92807)
Dublin (7050 Amador Plaza Rd, Dublin, CA 94568)
Emeryville (1555 40th Street, Emeryville, CA 94608)
Encinitas (1550 Leucadia Blvd, Encinitas, CA 92024)
Huntington Beach (6912 Edinger Ave, Huntington Beach, CA 92647)
Laguna Niguel (25600 Rancho Niguel Rd, Laguna Niguel, CA 92677)
Westwood Village (10861 Weyburn Avenue, Los Angeles, CA 90024)
Monrovia (407 W Huntington Dr, Monrovia, CA 91016)
Redondo Beach (1519 Hawthorne Blvd, Redondo Beach, CA 90278)
Roseville (1120 Galleria Blvd, Roseville, CA 95678)
San Diego (7803 Othello Avenue, San Diego, CA 92111)
San Jose (5095 Almaden Expressway, San Jose, CA 95118)
Florida
Boynton Beach (1520 SW 8th Street, Boynton Beach, FL 33426)
Davie (8944 State Rd 84, Davie, FL 33324)
Miami (5737 NW 7th Street, Miami, FL 33126)
Naples (1000 Immokalee Road, Naples, FL 34110)
SW Orlando (4601 Millenia Plaza Way, Orlando, FL 32839)
Georgia
Alpharetta (10700 Davis Drive, Alpharetta, GA 30004)
Atlanta - Perimeter (1201 Hammond Drive, Atlanta, GA 30346)
Illinois
Downers Grove (1021 Butterfield Rd, Downers Grove, IL 60515)
Vernon Hills (569 N Milwaukee Avenue, Vernon Hills, IL 60061)
Massachusetts
Burlington (43 Middlesex Turnpike, Burlington, MA 01803)
Maryland
Bethesda (7111 Westlake Terrace, Bethesda, MD 20817)
Columbia (6100 Dobbin Road, Columbia, MD 21045)
Missouri
Manchester (14205 Manchester Rd, Manchester, MO 63011)
New Jersey
Bridgewater (744 US Highway 202, Bridgewater, NJ 08807)
Paramus (577 Winters Avenue, Paramus, NJ 07652)
New York
Commack (1 Garrett Place, Commack, NY 11725)
New Rochelle (8 Joyce Road, New Rochelle, NY 10801)
Westbury (1250 Corporate Drive, Westbury, NY 11590)
Tennessee
Nashville (2421 Powell Avenue, Nashville, TN 37204)
Texas
Dallas - Galleria (13900 Dallas Pkwy, Dallas, TX 75240)
Virginia
Fairfax (11181 Lee Highway, Fairfax, VA 22030)
Design Center
California
Concord (1461 Concord Avenue, Concord, CA 94520)
North Carolina
Charlotte (900 Metropolitan Avenue, Building #1, Charlotte, NC 28204)
YardBIRDS