Home Depot to close 15 stores

Home Depot is closing stores for the first time.

ATLANTA (AP) — It’s been 41‚Ñ2 years since former Home Depot Chief Executive Bob Nardelli’s bold prediction that the home improvement retailer could sustain “unlimited growth” without significantly affecting sales at established stores.

That statement was made during much better economic times.

The Atlanta-based company, under different leadership, a different growth philosophy and amid an ailing housing market, put the brakes Thursday on some of its future expansion plans and said it would do what was previously unthinkable — close 15 of its underperforming flagship stores. Among those on the closing list were two Ohio stores, in Findlay and Lima,

It is the first time the world’s largest home improvement store chain has ever closed a flagship store for performance reasons. The move, to be completed within the next two months, will affect 1,300 employees.

The company reiterated its intention to open 55 new stores in the 2009 fiscal year, though it will no longer pursue the opening of roughly 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years.

“By building fewer stores, in the best locations, and making sure our existing stores are profitable, our company will be in a much stronger competitive position,” said CEO Frank Blake, who took over for Nardelli in January 2007.

Home Depot shares rose $1.17, or 4.1 percent, to $29.97 in afternoon trading.

Nardelli, now the chief at automaker Chrysler LLC, had other ideas on Nov. 18, 2003, when he told The Associated Press that The Home Depot Inc.’s robust new store growth would continue unabated and suggested the retailer may one day expand into Europe and Asia.

The company has added about 600 stores since then, but has scaled back new store growth in the last few years. Its only stores outside North America are a dozen in China, and those were obtained through an acquisition.

Some analysts and large investors have worried in the past that as Home Depot gets bigger, it would invariably put stores in direct competition with existing stores, a practice known in the industry as cannibalization.

Home Depot in the past has justified cannibalization by saying it increases the company’s overall market share.

On Thursday, Blake said Home Depot’s goal now is to “reduce cannibalization and drive higher returns.”

Growth aside, Home Depot previously had never closed one of its flagship stores for performance reasons.

On Sept. 21, 2007, Blake told AP that the company had no plans to make any broad-based job cuts or reduce the number of its core retail stores in the face of a persistent housing slump that wasn’t expected to improve anytime soon.

But since then, the economy and the housing market woes have grown worse, and Home Depot has announced several rounds of job cuts.

In December, Home Depot said it would cut 950 jobs and close three call centers that handle orders for home installation. The next month, Home Depot said it would cut 500 jobs at its headquarters.

Home Depot operates 2,258 stores in the United States, Canada, Mexico and China.