the visible hand

it is the theory which decides what can be observed – einstein

Home Depot sells US wholesale supply division, buys 12-store Chinese retail chain

Posted by ecoshift on June 19, 2007

Hit hard by the US housing market downturn Home Depot posted a 30% decline in profits last month. This month they are cashing out their wholesale supply division and buying a 12-store retail chain in China. Guess you gotta go where the money is…

Home Depot agrees to sell supply division – U.S. Business –
Report: Unit sale to three private equity firms is worth $10 billion

Reuters: NEW YORK – Home Depot Inc. has agreed to sell its supply division to three private equity firms, sources said on Tuesday, in a roughly $10 billion deal that unloads a business the home-improvement retailer’s former chief executive worked to expand.

Bain Capital, Carlyle Group and Clayton, Dubilier & Rice won the auction and were finalizing the deal early on Tuesday, sources close to the process told Reuters.

HD Supply, which sells building materials, waste water and utility products to municipalities and contractors, was put up for sale earlier this year, with investment bank Lehman Brothers overseeing the auction….

The sale price of about $10 billion was somewhat lower than investors and analysts had expected, said Keith Davis, an analyst with Farr Miller Washington.

With the sale of the supply business done, Davis said Home Depot would be free to take steps to improve retail sales that have slumped amid the housing weakness and aggressive competition from smaller rival Lowe’s Cos Inc.

Davis said Home Depot, which is boosting capital spending by 29 percent this year to improve stores and win back market share, can improve shareholder returns by raising its dividend as it matures.

“Over the long term, I don’t think (Home Depot’s) growth is going to be anywhere near where it was historically,” Davis said.

Home Depot and the other firms declined to comment.

Nova Scotia News –
Home Depot boss: We’ll reinvent for Chinese
By BILL POWER Business Reporter

You cannot sell lawn mowers in China — not yet, at any rate.

That’s why Home Depot will totally reinvent itself in the world’s biggest emerging consumer marketplace, Annette Verschuren, president of the home renovation chain for Canada and China, said Friday in Halifax.

“In 10 years we will be the biggest home renovation retailer in China, but entering one of our stores there will be nothing like entering one of our stores in Canada or in the United States,” the North Sydney-raised corporate chief said.

“When people obtain a home in China, they obtain just the shell. All the interior work is up to them.”

Ms. Verschuren, whose Dutch family moved to Nova Scotia when she was a child, said Home Depot will modify its operations in China to meet the demands of the marketplace, as it has in Canada with such tremendous success.

The next few years will be crucial for Home Depot in China, she said.

She said the potential of a customer pool of over $1.3 billion is “phenomenal” and the competition will be fierce.

With the recent acquisition of a 12-store retail chain in China, Home Depot in Canada gained immediate access to a marketplace larger than Canada and Mexico combined.

“The biggest challenge will be to keep up with this growing market,” she said.


3 Responses to “Home Depot sells US wholesale supply division, buys 12-store Chinese retail chain”

  1. Heraldo Riviera said

    Just when you thought it couldn’t get any worse.

    On a side note, I noticed your blog takes a long time to load. You might consider cutting down the number of posts that appear on the main page.

  2. ecoshift said

    When the major player in the home improvement market sells the division devoted to professionals, a division that provided 80% of sales growth in 2006, it does make you wonder just how long it will be before the housing/lumber market recovers…

    And, thanks for the feedback/tip… I cut back to 9 posts on the main page. Hope it helps…

  3. […] executives squander it on stock buybacks and speculative asset bubbles. Smart money in the US continues to flow to overseas. US manufacturing capacity is in decline. Sophisticated (well, at least complicated) and perhaps […]

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