Home Depot to close 15 stores, curb openings

By Karen Jacobs

ATLANTA (Reuters) - Retailer Home Depot Inc (HD.N: Quote, Profile, Research, Stock Buzz), which has been battered by the slumping housing market, on Thursday said it plans to close 15 underperforming U.S. stores and will curb future openings, sending its shares up more than 5 percent.

The home improvement industry leader said it will scrap plans to open about 50 U.S. 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 applaud these moves, given an industry we believe is nearing saturation, with a scarcity of attractive new locations," Standard & Poor's Equity analyst Michael Souers said in a research note.

Others called Home Depot's strategy a prudent way to conserve cash in the tough U.S. economy.

"Demand will remain somewhat depressed for the next several years, especially in the U.S.," said Zahid Siddique, a building products analyst with Gabelli & Co. "I don't think there's really any incremental benefit from opening these new stores."

Home Depot expects a charge of about $586 million tied to the store closures and new-store pullback, 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 slowing store growth and cutting capital spending as recession worries and higher prices for gasoline and food lead consumers to halt spending. On Wednesday, Starbucks Corp (SBUX.O: Quote, Profile, Research, Stock Buzz) said it would slash its U.S. coffee-store openings through 2011.

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