Home Depot’s (NYSE:HD) move into what they believed was a growing Chinese market has ended, as the company announced it will close all 7 of its big-box stores and lay off 850 workers as they move to an online sourcing model in the country.
HD opened up for business in China in 2006 through the purchase of a 12-store Chinese chain named The Home Way, but the effort to expand and grow the business model has suffered with the slowdown in the Chinese economy.
According to Reuters, China’s retail sales growth in all consumer goods categories slowed to 13.2 percent year-on-year in August to 1.67 trillion yuan ($263.84 billion) from 18.1 percent in December, and to date trend shows no signs of easing.
Home Depot will retain two specialty retail stores in Tianjin, and employ up to 170 workers in two locations, one in Shanghai and another in Shenzhen, but plans to expand beyond those locations are based on developing e-commerce relationships in the country.
Home Depot anticipates taking a $160 million charge in the third quarter from the closures which is not expected to materially impact it’s full-year forecasts.
Home Depot shares are trading up over 2% in Friday mornings early trading.
-Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he does not hold a position in the aforementioned security.
The company expects to incur a $160 million charge in the third quarter as a result of the closures, but said this will not affect its full-year earnings forecast.