Home Depot Shuts Stores, Cuts Jobs
Home improvement retailer The Home Depot is engaging in some
cost-cutting measures. Home Depot will close three stores and terminate 1,000 employees.
According to RISNews, Home Depot’s job cuts will mostly be on the corporate side of the business, with HR, finance, real estate and construction positions being eliminated in an effort to consolidate operations. Less than 1% of Home Depot’s 322,000 global employees will be affected.
A memo circulated to employees said the three stores slated for closure are pilot specialty format stores in Wilton, NC, Waveland, MS and Austell, GA. The memo said no further store closures are planned. During 2009, Home Depot closed 34 Home Expo Design Center-formatted stores and eliminated 7,000 jobs.
Home Depot Sags in Q3
Home Depot’ cost-cutting efforts come not long after the retailer released
disappointing results from its third quarter of fiscal 2009. During the quarter, Home Depot reported consolidated net earnings of $689 million, an 8.8% decline from $756 million in Q3 2008. In addition, Home Depot’s consolidated net sales dropped 8%, from $17.8 billion to $16.4 billion. Comparable store sales decreased 6.9% on a consolidated basis and 7.1% in the U.S. Gross profit decreased 7.2%, from $6 billion to $5.6 billion.
Despite these poor results, which Home Depot attributed to pressure in the housing and home improvement markets, the retailer said there are some positive signs of stabilization in the home improvement market.
Lowe’s Grows
In contrast to Home Depot, Lowe’s Companies, Inc., the second-largest U.S. home improvement retailer, is planning to expand this year. Lowe’s plans to add
three storesin the western Canadian province of Alberta during fiscal 2010. Lowe’s is also targeting expansion into the western Canadian provinces of Edmonton, British Columbia and Saskatchewan in future years.
Lowe’s opened its first Canadian stores in the greater Toronto, ON area in December 2007 and now operates 15 stores in the eastern province of Ontario. This year, Lowe’s will open three new stores in the greater Calgary, AB area. During 2009, Lowe’s repeatedly stressed the importance of store expansion in general, and store expansion in Canada in particular.
In September 2009, Lowe’s executives said that
store expansion into underserved markets, exploration of international opportunities, and cross-functional efficiency initiatives should result in market share gains, improved customer service and sales growth. Lowe’s also expects consumers to resort to more do-it-yourself home repair projects in light of the difficult economy.
As part of overall financial guidance released for 2010, Lowe’s said it will add another 35-45 new stores (ending January 2011), reflecting total square footage growth of approximately 2-2.5%. Total sales are expected to grow 3-4%, from approximately $46.7 billion to approximately $48-49 billion, and comparable store sales are expected to rise about 1%. Store opening costs are expected to be about $30 million. Lowe’s did not specify in what markets it would locate the new stores.
