Retailer Home Depot, which has been battered by the slumping housing market, said Thursday it plans to close 15 underperforming U.S. stores and will curb future store openings, sending its shares up 2 percent.
The home improvement industry leader said it expects a charge of about $586 million tied to the moves, with about $547 million pretax to be recognized in its first quarter. Excluding this charge, the company reiterated that per-share profit is still expected to fall as much as 24 percent for the year.
Many retailers are curbing store growth and cutting capital spending as recession worries and higher prices for gasoline and food lead consumers to pull back spending.
The weak housing market has compounded troubles for Home Depot and rival Lowe's , which have both posted weaker profits as falling home values and slower sales curbed expenditures on big-ticket renovations.
Atlanta-based Home Depot has been upgrading existing stores, hiring more trade specialists and taking other steps to win back market share under Frank Blake, who took over as chief executive when Robert Nardelli resigned under criticism in early 2007.
Home Depot, which also faces increased competition as Lowe's expands to big U.S. cities and Canada, said it will no longer pursue the opening of about 50 stores that had been in its new-store pipeline. New store spending will be cut by about $1 billion over the next three years.
"We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales," Blake said in a statement.
The retailer said it still plans to open 55 new stores this year, down from about 100 opened in 2007. It also reiterated that capital spending would be $2.3 billion this year, down from $3.6 billion last year.
Home Depot, which has more than 2,200 stores, said the stores to be closed account for less than 1 percent of its store portfolio.
The 15 store closures will affect 1,300 workers, many of whom will be offered posts at other stores. The stores to be closed are in Wisconsin, Ohio, New Jersey, Indiana, Kentucky, Louisiana, Minnesota, New York, North Dakota and Vermont.
Home Depot's shares were up 60 cents, or 2.1 percent, to $29.40 in morning trading on the New York Stock Exchange. Lowe's was up 47 cents, or 1.9 percent, to $25.66.