Home Depot is closing its remaining seven big box stores in China as the company shifts its focus in that market to specialty stores and online offerings, it announced. The closings will impact about 850 associates, Home Depot stated, who will receive severance packages and job placement assistance.
As a result of the store closings, the company will record an after-tax charge of approximately $160 million, or about 10 cents per diluted share, in the third quarter, which includes impairment of goodwill and other assets, lease terminations, severance and other charges associated with the store closings. Excluding the approximately 10 cents per diluted share store closing charge associated with the store closings, Home Depot confirmed that it still expects its fiscal 2012 diluted earnings-per-share to be up approximately 19% to $2.95 for the year, in line with prior guidance.
“Closing stores is always a difficult decision,” said Frank Blake, Home Depot chairman and CEO. “We are thankful for the dedicated service of our store associates in China, and we wish them all the best during this transition.”
Although it is closing its big box stores, Home Depot will maintain a new formats team to continue research and development activities. The company also is maintaining two recently-opened specialty stores, a paint and flooring store and a Home Decorators Collection store, both located in Tianjin, and it is in the beginning stages of developing relationships with several of China’s leading e-commerce websites, a combination which the company said is more tailored to Chinese customers’ needs and shopping preferences.