Home Depot closing 15 stores

ATLANTA – It’s been 4 1/2 years since former Home Depot Chief Executive Bob Nardelli’s bold prediction that the home improvement retailer could sustain “unlimited growth” without significantly affecting sales at established stores.

That statement was made during much better economic times.

The Atlanta-based company, under different leadership, a different growth philosophy and amid an ailing housing market, put the brakes Thursday on some of its future expansion plans and said it would do what was previously unthinkable – close 15 of its underperforming flagship stores.

It is the first time the world’s largest home improvement store chain has closed a flagship store for performance reasons. The move, to be completed within the next two months, will affect 1,300 employees.

No Northwest stores are on the list of those being cut.

The company reiterated its intention to open 55 new stores in the 2009 fiscal year, though it will no longer pursue the opening of roughly 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years.

“By building fewer stores, in the best locations, and making sure our existing stores are profitable, our company will be in a much stronger competitive position,” said CEO Frank Blake, who took over for Nardelli in January 2007.

Home Depot shares rose 4.1 percent in afternoon trading.

Nardelli, now the chief at automaker Chrysler LLC, had other ideas on Nov. 18, 2003, when he told the Associated Press that The Home Depot Inc.’s robust new-store growth would continue unabated and suggested the retailer may one day expand into Europe and Asia.

The company has added about 600 stores since then, but has scaled back new store growth in the last few years. Its only stores outside North America are a dozen in China, and those were obtained through an acquisition.

Some analysts and large investors have worried in the past that as Home Depot gets bigger, it would invariably put stores in direct competition with existing stores, a practice known in the industry as cannibalization.

On Thursday, Blake said Home Depot’s goal now is to “reduce cannibalization and drive higher returns.”

On Sept. 21, 2007, Blake told AP that the company had no plans to make any broad-based job cuts or reduce the number of its core retail stores. But since then, the economy and housing market have grown worse, and Home Depot has announced several rounds of job cuts, including 950 jobs in December and 500 jobs at its headquarters in January.

The stores Home Depot said Thursday it plans to close consist of three in Wisconsin, two in Ohio, two in New Jersey, two in Indiana and one each in Kentucky, Louisiana, Minnesota, North Dakota, New York and Vermont.

A company spokesman said some of the affected employees will be relocated, while others could lose their jobs.

Home Depot operates 2,258 stores in the United States, Canada, Mexico and China. In the Inland Northwest, there are stores in Spokane, Spokane Valley, Liberty Lake, Coeur d’Alene, Sandpoint and Lewiston.