Home Depot cuts rattle supply chain
The Home Depot will layoff about 130 involved in the logistics side of the business as part of its decision to shut down its Expo Design Center unit and slash 7,000 jobs, said Mark Holifield, senior vice president global supply chain.
The nation’s second-largest retailer and third-largest container importer, announced Monday that it planned to close its 34 upscale Expo stores and 14 other specialty stores to concentrate on its core big box outlets. Store workers and other corporate support personnel representing about 2 percent of the company’s workforce will be let go. Home Depot said the Expo concept has not met financial expectations over many years, and suffered significant losses as homeowners refrained from fancy upgrades and home decor projects during the current recession.
Home improvement retailers such as Home Depot have been especially hard hit by the economic crisis because the crash of the housing market means fewer people are buying materials to build, fix or upgrade their homes. Home Depot’s sales were down 8 percent in 2008 and its earnings fell 24 percent.
Supply chain operations did not escape the cost-cutting initiative.
Home Depot will shutter seven distribution operations, including shared and full warehouses, and give pink slips to about 80 warehouse workers, Holifield said Tuesday at the Logicon supply chain conference in the company’s home town of Atlanta.
The facilities do not function as traditional distribution centers but rather as consolidation hubs for special project orders, so that countertops, appliances, flooring or other materials can be shipped to the customer in a single load.
Holifield also said the company’s effort to right-size its cost structure to meet current sales levels also required the elimination of about 50 supply chain support professionals out of a force of more than 500.
Home Depot said it will take a $532 million pre-tax charge covering the disposal of building assets, existing leases, severance pay and store closing costs. The measures are expected to save the company $305 million in fiscal year 2009. ' Eric Kulisch