Home Depot To Cut 7,000 Jobs, Close Stores

The Home Depot Inc. will slash 7,000 jobs, freeze officer salaries and exit its Expo business, closing 34 such stores and other locations due to the recession and housing slump, the company reported Monday.

Home Depot has a significant presence in the Dallas/Fort Worth area, including one Expo store at the Galleria, located at 13900 Dallas Parkway.

Home Depot officials could not be reached for immediate comment.

But in a statement, the company says that during the next two months it plans to shutter 34 Expo Design Center stores, five YardBirds stores, two Design Center stores and seven HD locations. This will eliminate 5,000 jobs in the stores, support functions and distribution centers.

The Atlanta-based home improvement retailer said the job cuts are “to better align the company's cost structure with the current economic environment.” The company cut 500 jobs , or 10 percent of its work force, in January 2008 and closed 15 stores, cutting 1,300 jobs in May. It eliminated 300 jobs at its headquarters in 2006.

The company said Monday it will continue its move toward a region- and district-based support model in field functions and will cut jobs in administrative functions in store support centers. The support reductions will eliminate 2,000 jobs and equal a 10 percent reduction in the company's officer ranks. It will not impact any customer-facing positions in Home Depot stores.

Home Depot (NYSE: HD) also has adopted a salary freeze for all its officers. But, it will continue to offer merit increases to nonofficer associates, plus earned bonuses and will continue to make the company's existing 401(k) matching contribution for all associates, including officers.

In total, the restructuring moves will cost Home Depot $532 million in charges, $392 million of which will be taken in the fourth quarter. The charges include fixed-asset write-offs, lease reserves on closed stores, severance and store closing costs.

But the company believes the cuts will ultimately boost its fiscal 2009 earnings before interest and tax by $305 million. The benefit is primarily a result of payroll savings and operational improvements from the business exit, it said.

In addition, it will take two charges in the fourth quarter related to its sale of HD Supply in 2007 and its ongoing equity interest in that business. First, it will record a charge of $55 million, net of tax, to be reflected in discontinued operations primarily related to the working capital dispute related to the sale of the business. Second, it will record a pre-tax charge of $163 million that will be reflected in other expense for a write-down of the company's investment in HD Supply.

Home Depot expects its sales to be down 8 percent and its earnings to drop 24 percent in fiscal 2008. In the third quarter, its profit fell 31 percent to $56 million as sales fell 6.2 percent to $17.8 billion.

"We're very fortunate that the soundness of our company lets us live our value of taking care of our people, even in this time of unprecedented economic hardship," said Frank Blake, chairman and CEO, in a news release. "These changes will make us a stronger company and will allow us to continue to grow associate employment over the long term to benefit our customers."

original post by Dallas Business Journal