Looks like China's economic slowdown has claimed another victim. Atlanta-based Home Depot Inc. (NYSE: HD) said today that it will close its remaining seven big-box stores in the People's Republic.
Home Depot chairman and CEO Frank Blake put on a brave face for what could be seen as a failure of the world's largest home improvement retailer's efforts in the largest market in the world: "We've learned a great deal over the last six years in China, and our new approach leverages that experience and reflects our continuing interest in providing value to Chinese customers, as well as our shareholders."
That new approach is to focus on Internet-based sales and specialty stores. Home Depot recently opened two specialty stores in Tianjin and is pursuing relations with Chinese e-commerce websites.
But the store closures will result in a loss of 850 jobs and an after-tax charge of about $160 million, or 10 cents per diluted share, in the third quarter of 2012 related to lease terminations, severance and other costs.
Home Depot entered the rapidly growing Chinese market in late 2006 by acquiring a chain of 12 stores that had been modeled it on its larger American counterpart. Though the company declined to disclose the purchase price, Chinese news reports at that time put it at $100 million. But Home Depot was a relatively late entrant into the market behind international chains such as the U.K.'s Kingfisher, which came to China in the late 1990s.
Home Depot shares are up about 0.2% in premarket trading to $58.41. The 52-week range was $31.03 to $58.39, but the mean price target of analysts was only $58.61 before this news.
Filed under: 24/7 Wall St. Wire, China, International Markets, Retail Tagged: HD