International News - Home Depot revamps stores to boost sales

US DIY giant Home Depot is to invest US$4 billion (£2.49 billion) in its supply chain and stores this year.

At a meeting with analysts, Home Depot chief financial officer Carol Tome said the investment will include the opening of 200 new stores.

She said US$250 million (£155 million) has been earmarked for the improvement of existing shops, a quarter of which are seven years or more old. Only eight stores have undergone major remodelling in the past three years, but Tome said these have delivered an average sales uplift of 12 per cent following refits.

'We must have some short term disruption but we require considerably less than a 12 per cent return on sales for a positive return on investment,' said Tome.

The majority of the refit cash available will be spent on approximately 50 shops that will be 'gutted' and revamped at a cost of about US$4.5 million (£2.8 million) each.

Home Depot, the biggest DIY retailer in the world and the 46th highest turnover business globally, has 1,500 stores and sales of more than US$50 billion (£31 billion).

Chairman and chief executive Bob Nardelli said the capital investment was 'unprecedented', particularly since it is being made against a background of seismic change.

The retailer failed to match the gains of closest competitor Lowe's in recent months. Lowe's makes less than half the sales of Home Depot but increased like-for-likes by 4.1 per cent in the three months to the beginning of November.

In the same period, Home Depot like-for-like sales fell by 2 per cent.