Home Depot shuttering last big box stores in China

A Chinese member of staff waits for customers at the opening of US home improvement chain Home Depot's first outlet in Beijing, 26 August 2007. Home Depot, the world's largest home improvement retailer, is expecting low profits for the foreseeable future because of intense competition, low average family incomes and high distribution costs, but hopes to gain long-term as Chinese residents become richer and China's cities swell, as 400 million people -- more than the entire US population -- are expected to move from rural to urban areas by 2030, feeding an unprecedented construction boom. AFP PHOTO (Photo credit should read AFP/AFP/Getty Images)

(AP) BEIJING - Home Depot Inc. (HD), the U.S.-based home improvement retailer, said Friday it will close its remaining seven big box outlets in China and focus on Internet-based sales and specialty stores.

Sellers of furniture, paint and other home-improvement products in China have been hurt by an economic slowdown that has reduced housing sales, cutting demand from buyers to outfit new properties. The closures will result in a loss of 850 jobs, the company said.

Home Depot said it will retain two specialty stores in Tianjin, a city east of Beijing, and is developing relations with Chinese e-commerce websites. The company said it will keep 170 staff in its specialty stores, a sourcing office and a team to work on new retail formats.

Home Depot entered China in 2006 by acquiring The Home Way, a 12-outlet chain of stores whose Chinese founder modeled it on its giant American counterpart. The company declined to disclose the purchase price but Chinese news reports at that time put it at $100 million.

"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," Home Depot chairman and CEO Frank Blake said in a statement.

The company said it would record an after-tax charge of about $160 million, or 10 cents per diluted share, in the third quarter of 2012 for the closures. It said that would include lease terminations, severance and other costs.