No More Big-Box Home Depot Stores in China

By Trey Thoelcke Published Sep 14, 7:56AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

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.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.