Home Improvement Retailer Significantly Cutting Square Footage Growth & Capital Expenditures
The Home Depot (NYSE:
HD) updated its square footage growth plans as part of a strategic plan to improve cash flow, provide stronger returns for the company and invest in its existing stores. While the country's largest home improvement retailer re-stated its intentions to open 55 new stores in fiscal 2008 (it opened 87 stores in 2007 for a 4.5% square footage growth), it is curtailing growth in 2009 and beyond to 1.5% growth in square footage per year.
Further, Home Depot is backing out of approximately 50 U.S. stores that have been in its new store pipeline, in some cases for as long as 10 years. The retailer is taking a $400 million hit associated with this decision related to its capitalized development cost and obligations associated with those future store locations.
Home Depot said this initiative will reduce capital spending by $1 billion over the next three years. For fiscal 2008, the company estimates capital spending at $2.3 billion, down from $3.6 billion last year.
The retailer is also shuttering 15 underperforming U.S. stores. The company said this decision was a result of a thorough evaluation of its 2,258-store portfolio. Home Depot expects to record a $186 million loss related to these store closings.
The 15 stores being closed, as provided by the company, are as follows:
- Store #2015 East Fort Wayne, Indiana
- Store#2032 Marion, Indiana
- Store#2310 Frankfort, Kentucky
- Store#379 Opelousas, Louisiana
- Store#2819 Cottage Grove, Minnesota
- Store#6901 East Brunswick, New Jersey
- Store#6904 Saddle Brook, New Jersey
- Store#6171 Rome, New York
- Store#3702 Bismarck, North Dakota
- Store#3874 Findlay, Ohio
- Store#3865 Lima, Ohio
- Store4552 Brattleboro, Vermont
- Store4932 Beaver Dam, Wisconsin
- Store4933 Fond du Lac, Wisconsin
- Store4913 NW Milwaukee, Wisconsin
This article appeared in CoStar's Retail News Roundup: May 4 to 10, 2008. The Roundup is a weekly column by CoStar senior news editor, Sasha Pardy, covering retail store expansions, closings, bankruptcies, acquisitions/mergers/sales, new retail developments, personnel changes, sustainability, and more.
This week in the Retail Roundup, CoStar reports on expansions or new concepts at Kohl's and Steve & Barry's; new retail developments in NY, MI, CA, FL, and TX; acquisition, merger, loan or sale activity at Hanley Investment Group, Centro Properties Group, Regal Cinemas and Consolidated Theatres, Couche-Tarde and Spirit Energy, Max & Erma's and Damon's Grill, ; closings, cutbacks or bankruptcies at Linens 'N Things, Starbucks, Home Depot, and Disney Stores; sustainability at Kohlberg Kravis Roberts and Office Depot; personnel announcements at Saul Centers, Hastings Entertainment, and Blendz; and more.