Home Depot to cut jobs, close Expo stores in suburbs

Home Depot Inc. Monday announced plans to cut 7,000 jobs and close its remaining design showrooms, two of them in the suburbs.

The home-improvement giant will close 34 Expo stores including locations in Vernon Hills and Downers Grove. Liquidation sales will begin Tuesday at the stores expected to remain open through the end of April.

Declining home values and high unemployment rates have driven consumers to slash renovation projects from their budgets leading to decreasing sales at design centers.

The upscale centers are an area of the retail scene having a tough time surviving, according to retail experts. Other area Expo stores in Schaumburg and Aurora closed more than three years ago. And Hoffman Estates-based Sears has closed Great Indoors stores, including the location in Schaumburg that will remain open until March 11.

"It's not a surprise to see these stores closing. I expect they have been hit very hard with the decrease in home sales and the fact that people don't have the money to renovate," said George Rosenbaum, president of Leo J. Shapiro Assoc. Chicago market research firm. "They're taking a double whammy."

The company said Monday the cuts will affect about 2 percent of the company's 300,000 workers and cause the Atlanta-based chain to record a $532 million pretax charge, most of which will be recorded in the fourth quarter.

Closing the Expo division will cost about $532 million before tax, of which $390 will be recorded in the fourth quarter, Home Depot said. The company also plans to cut capital spending to about $1 billion in the 12 months ending February 2010 from $1.8 billion a year earlier, in anticipation of continued weakness in sales, the company said in a release.

The store closings will result in the loss of 5,000 jobs, according to Home Depot.

Another 2,000 jobs will be cut at Home Depot's support centers and field operations, said spokeswoman Jen King. "These cuts are being made to better align the cost structure with the current economic environment," King said. The job cuts will affect about 2 percent of the company's 300,000 workers at the Atlanta-based chain.

The retailer will also freeze salaries of all of its officers, the company said in a statement. It will continue to offer merit increases to non-officers as well as bonuses and 401(k) matching contributions for employees.

Retail analysts believe the cuts and store closings will make the retailer a stronger company.

"It gives a greater likelihood that Home Depot will remain profitable and the price of its stock will be supportive," Rosenbaum said.

He added that Home Depot's talent is in the home improvement business.