Home Depot to close its big-box stores in China

The Home Depot will close its remaining seven big-box stores in China, the company announced late yesterday, in order to shift its focus to specialty stores and online offerings in that market.

No date was given for when the Atlanta retailer would begin the closures. Although it is abandoning the big-box format, Home Depot said it is maintaining a new formats team to continue research and development activities in China. In addition, the company will continue to operate two recently opened specialty stores, a paint and flooring store and a Home Decorators Collection store, both of which are located in Tianjin. Home Depot is also in the beginning stages of developing relationships with several of China's leading e-commerce websites, a combination which the company believes is more tailored to Chinese customers' needs and shopping preferences.

"We've learned a great deal over the last six years in China, and our new approach leverages that experience and reflects our continuing interest in providing value to Chinese customers, as well as our shareholders," said president and CEO Frank Blake in a statement released by the company.

Home Depot entered China with the purchase of the Home Way, a Tianjin-based chain of DIY warehouses, at the end of 2006. The Atlanta retailer spent the next year remodeling and rebranding 12 stores in six cities in a region southeast of Beijing. Home Depot expanded its presence, at one time operating a store in Beijing, but then ran into many of the same challenges as European retailers like OBI and B&Q. For a number of reasons, the Chinese home-improvement market never measured up to its initial retail promise. Home Depot began consolidating in 2009 and continued to close underperforming stores. 

The closing will affect approximately 850 people. 

“China has been a journey,” Blake told a group of investors in December of 2010. “I don't think we're alone in having it take some time to figure out how to build a profitable business model. We've said from the start that we're not there to drive square footage growth. We're there to figure out a profitable business model and then move.”