ATLANTA–The Home Depot today announced it would abandon its earlier plans to open around 50 stores in the United States, some of which had been in the pipeline for more than 10 years.
As a result, the giant home and hardware center will take a $400 million charge related to “capitalized development costs and ongoing obligations.”
Spending on new stores will be lowered by around $1 billion over the next three years, the company said in a statement.
In addition to retracting its store opening plans, the retailer said it would close 15 underperforming stores. Those stores are located in 10 states on the East coast, and in the South, Midwest and West.
The closings will affect some 1,300 employees. Managers and assistant managers will be offered similar positions in other stores. For the remaining employees, Home Depot “will work to place [them] in other comparable-store positions where available.”
The store closings will mandate a charge of an additional $186 million, which includes inventory markdowns of $11 million and severance payments of $8 million.
The purpose of the closings and revised plans, the company said, was to “improve free cash flow, provide stronger returns … [and] invest in existing stores to continue improving the customer experience.”
Notwithstanding the scaled-back expansion plans and the store closing, the retailer said it still intends to adhere to its plans to open 55 new stores, two-thirds of which will be in the United States, beginning in fiscal 2009.