The Wall Street Journal-20080201-Home Depot to Cut Headquarters Staff

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Home Depot to Cut Headquarters Staff

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Home Depot Inc., citing a tough economic climate, announced it is laying off 500 workers at its Atlanta headquarters.

The job cuts represent 10% of the 5,000 employees at the company's main office, company spokesman Ron DeFeo said. He declined to say how much money the layoffs will save the company. Workers will be paid for 60 days. The company has about 350,000 employees world-wide.

"We're certainly in a tough business environment, and we anticipate a tough environment in 2008," Mr. DeFeo said.

Unlike retailers that began feeling the effects of a slowing economy in the last quarter, Home Depot's sales have fallen off sharply for more than a year as the housing slowdown has crimped sales of building supplies.

The company has reported declining sales at stores open at least a year for the last six quarters. In November, Home Depot reported a 27% drop in net income for its fiscal third quarter, cut its full-year earnings outlook and delayed the rest of a share-repurchase program.

Even before the housing slump, Home Depot was losing market share to smaller, faster-growing rival Lowe's Cos., based in Mooresville, N.C. Under Chief Executive Frank Blake, who was appointed last January, Home Depot began to pour more resources into its stores to try to attract customers. The company says the cuts at headquarters, which were across all departments, won't interfere with improvements at its stores.

In November, after Home Depot sold its wholesale-building-supply business and bought back $10.7 billion in shares, it forecast per- share earnings from continuing operations would decline 7% to 9%, compared with an earlier forecast of a decline of 12% to 15%. Home Depot is scheduled to report its fourth-quarter and full-year-2007 results Feb. 26.