Home Depot closing 15 stores

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Last week, Home Depot announced that it would be closing 15 stores that it considers "underperforming." The closures will affect 1,300 employees. On the flip side, Home Depot said it will continue with plans to open 36 stores that are already under development. Another 50 stores were "in the pipeline," but those plans are being scrapped for now. Consider this a move to weed out the bad stores, and open ones that are expected to do better.

The closings are mostly in Wisconsin, Indiana, New Jersey, and Ohio. I took a look at the list of stores in my area, and never realized that there are eight Home Depots within about a 20 mile radius of me. It's no wonder they're closing one of them. Even with metro-Milwaukee's population of something around 1.3 million people (city and suburbs together), eight stores still sound like a lot to me.

Home Depot has had a strategy of adding more stores to an area in order to increase total market share in that area, even though additional stores may cut into the sales of Home Depot stores already standing. This latest announcement suggests that the chain is going to be a bit more strategic about its store openings.

Obviously, new store openings are very expensive, so management wants to put its expansion dollars into those stores that will bring the best returns. Sounds good to me. I love Home Depot and have had nothing but good experiences with it. I like the idea of changing things up in order to be more profitable and protect the brand.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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