Home Depot Reports Profits, Store Closings

The Home Depot Inc. (Atlanta) reported a more than 13 percent jump in first-quarter profit on solid revenue growth. At the same time, the company announced it is closing 15 of its design centers.

The nation's largest home improvement store chain said it earned $1.25 billion for the three months ending May 1, 2005, compared to a profit of $1.1 billion for the same period a year ago. Same-store sales rose 2.1 percent in the quarter, compared to 7.7 percent a year ago.

“While we don't like to sound like a weather report, weather did impact our business,” said Home Depot cfo Carol Tome.

The company says it was hurt by a cool and wet March, while rising gas prices affected sales at certain stores. Merchandising chief John Costello said the sales of lumber and other seasonal products slowed in the quarter. Overall, the company's effort to modernize its stores has helped it bring in more customers, he added.

Home Depot plans to close 15 of its 54 Expo Design Center stores over an unspecified period. It also plans to convert five other EXPO stores to The Home Depot store format.

According to Home Depot spokesman David Sandor, the decision was made because certain design centers were not meeting the company's strategic objectives. “At the end of the day, it's a business decision that we make regarding how we operate our stores,” says Sandor. “We did take a 3-cent charge to make this decision within the quarter but we think in the long-term it's the right one because it allows us to focus on our most profitable stores in the remaining 34 markets.”

Four of the design centers that will be closed are in Texas, three are in Illinois, two are in Michigan and there is one each in California, Colorado, Georgia, Kansas, Massachusetts and Ohio. Two of the design centers that will be converted are in New York and there is one each in California, Michigan and New Jersey.

Home Depot operates 1911 stores in the U.S., Canada and Mexico.