Home Depot's DIY model fails in China's do-it-for-me market


Posted at Sep 14 2012 11:05 AM | Updated as of Sep 15 2012 02:05 AM

Home Depot Inc, the world's largest home improvement chain, will close all seven of its big box stores and cut 850 jobs in China as the retailer changes its focus in the Chinese market to online and specialty stores. 

The company will retain two recently opened specialty stores in Tianjin and is "developing relationships with several of China's leading e-commerce websites," it said in a statement late on Thursday. 

"China is a do-it-for-me market, not a do-it-yourself market, so we have to adjust," Home Depot spokeswoman Paula Drake told Reuters late on Thursday. 

The company made its first foray into the rapidly-growing Chinese market in late 2006 through its acquisition of a 12-store Chinese chain called The Home Way. 

However, it has struggled to expand ever since as it was a relatively late entrant into the market behind other international chains such as Britain's Kingfisher Plc  which ventured into the world's most populous country in the late 1990s. 

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. 

Home Depot said it will continue to employ about 170 associates in China working in the sourcing offices in Shanghai and Shenzhen. 

Shares of the Atlanta-based company closed up 2 percent at $58.30 on the New York Stock Exchange on Thursday.