Home Depot Announces Store Closings Thursday

Home Depot announced Thursday that the company will have a large number of store closings in order to increase its profitability.

Home Depot (NYSE: HD) is halting plans to open about 50 U.S. stores that have been in its new-store pipeline, some for more than 10 years, and will begin closing 15 underperforming stores over the next seven weeks.

The store closings will cause Home Depot to fire 1,300 employees and it will cost the Atlanta-based company $586 million in charges, $547 million of which will be recognized in the first quarter.

This is the largest wave of closings among Home Depot's stores.

Halting the 50 store openings will reduce new-store capital spending by about $1 billion over the next three years, but total capital spending for the current year is still expected to be about $2.3 billion. Home Depot spent $3.6 billion on new stores and renovations last year.

Home Depot will shutter stores in 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.; and Milwaukee, Wis.

The turmoil in the housing market gave Home Depot its first annual sales decline and lowered profit by about 24 percent in 2007. It posted net income of $4.4 billion on $77.3 billion in sales in 2007, compared with net income of $5.8 billion on $79 billion in sales in 2006.

As of 2:30pm, Home Depot's stock price is at $30.18, up $1.38 (4.82%).

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