Home Depot to slow store growth this year-analyst
ATLANTA (Reuters) - Home improvement retailer Home Depot Inc <HD.N>, pressured by continued weakness in the U.S. housing market, is expected to ramp down new-store openings this year and boost spending to maintain existing outlets, an analyst said on Friday.
Sanford Bernstein analyst Colin McGranahan said he met with Home Depot executives, including Chairman Frank Blake and Chief Financial Officer Carol Tome, earlier this week.
Though Home Depot has not yet disclosed 2008 forecasts, "the company did comment that store openings will be 'a lot' fewer as lower volumes and more conservative capital allocation are eliminating marginal stores," McGranahan said in a research note.
McGranahan projected that Home Depot, which has generally scaled back store openings in recent years, would open 76 new stores in 2008, but he added he would not be surprised to see openings in the 40- to 60-store range, "with some closings as well."
Home Depot is taking a number of steps to improve existing stores and win back market share under Blake, who took over as chief executive when Robert Nardelli resigned under criticism in early 2007.
Last year, Home Depot announced the closing of two flooring stores and 11 Landscape Supply stores that sell plants as it refocuses on its core warehouses.
McGranahan added that Home Depot will spend more to maintain existing stores than to open new stores in 2008.
Home Depot "seemed comfortable that market shares are moving in the right direction as weaker competitors struggle, Sears <SHLD.O> sheds share, and (Home Depot's) 2007 efforts and initiatives show traction," the note said.
McGranahan also said he doesn't expect the second part of a $22.5 billion stock buyback that Home Depot announced last summer to be completed in 2008.
Home Depot completed the first part of that repurchase last year, when it bought back about 290 million common shares for $10.7 billion.
Shares of Home Depot fell 52 cents to $29.04 on the New York Stock Exchange trading Friday. The stock has fallen 26 percent in the past year.
(Reporting by Karen Jacobs; Editing by Jeffrey Benkoe)