Battered by a downturn in the housing market, Home Depot is laying off 500 workers at its headquarters in Atlanta, The New York Times reports.
The chain appears to be the first major American retailer to make job cuts because of a slowdown in consumer spending, and the move may be an ominous sign of what is to come across the industry. “We are operating in a tough economic environment and we see that continuing in 2008,” spokesman Ron DeFeo told the newspaper.
Home Depot is eliminating jobs in a variety of departments, like human resources and information technology, but the layoffs will not affect workers at the chain’s 2,200 stores, he said. Laid-off employees will receive pay for 60 days.
The retailer’s third-quarter profit fell 27 percent to $1.1 billion from $1.5 billion in the period a year ago. Behind the earnings dip was a drop in sales from $19.6 billion to $19 billion. “We thought the housing market would be soft, but we were not pessimistic enough,” said Carol Tome, Home Depot’s chief financial officer when the retailer announced its third-quarter earnings in November.
Home Depot is in a difficult position because after years of cutting back on service, it is now investing heavily in new employees and store remodeling, but the extra spending coincided with an economic downturn.