Home Depot in E.B. to close; clearance begins

EAST BRUNSWICK - The Home Depot store at Route 18 and Racetrack Road is one of 15 "underperforming" locations that the hardware retail chain will close in the coming months.

TheAtlanta-based company announced the closings last week when it unveiled a new strategic plan for square-footage growth. The company, seeking to improve free cash flow, provide stronger returns and invest further in existing stores, plans to open 55 new stores and grow in square footage by 1.5 percent per year starting in 2009.

While embarking on that mission, the retailer will, however, close 15 stores that are not meeting the targeted returns. That includes the East Brunswick location, along with a store in Saddle Brook and those in several other states. The locations in Milltown and Old Bridge will remain open.

The East Brunswick location began a clearance sale last week, which could last up to seven weeks, according to Jennifer King, spokeswoman for the retailer.

"It could be sooner. It depends on how quickly they sell through the merchandise," she said.

The 15 closings will affect about 1,300 employees, though the company said store managers and assistant managers will be offered store management positions elsewhere within the organization. Efforts will be made to place the rest of the employees in other comparable store locations where possible, according to a press release.

The East Brunswick store employs 78 people, according to King. She said those who are not placed elsewhere will receive 60 days' pay from their last day on the job, and be eligible for mid-year bonuses and for additional severance based on their length of service to the company.

"Closing a store is always a difficult decision, because it affects both our people and our communities," Home Depot Chairman and CEO Frank Blake said in a press release. "… This model prioritizes locations that make the most efficient use of capital, reduce cannibalization and drive higher returns. By building fewer stores, in the best locations, and making sure our existing stores are profitable, our company will be in a much stronger competitive position."

The company expects to record inventory markdowns of $11 million and severance of $8 million with the closings.