Don’t Cry for Home Depot, Argentina. The company announced this week an agreement to sell its four Argentine stores to Hipermercados Jumbo, plus five stores in Chile to its joint venture partner, Falabella. This dramatic pull out from South America is on top of the cancellations and withdrawals we have seen from expansion plans in the U.S. Bob Nardelli, Home Depot’s president and CEO, put out a press release in which he reiterated the company’s intention to continue focusing on international growth and opportunities. He stated, “The potential to expand our international presence, which today includes Canada, Mexico and the Caribbean, remains a key strategic focus and supplements Home Depot’s leading domestic operations. We are committed to investing in attractive international markets, as was recently demonstrated by our acquisition of Total HOME in Mexico. We intend to continue growing aggressively in Mexico, which we believe is a market that offers great opportunities. As part of our strategy in Mexico, we will enhance our presence with strong vendor resources from one of our country’s chief trading partners.” Although both transactions were for undisclosed amounts, one press account said Home Depot got $87 million for its Argentine stores. The Home Depot stores will take down their orange logos and become re-branded. The retreat from two major South American markets caused analysts to conclude that Home Depot will now focus its expansion efforts on Europe, but if Wal-Mart’s experience has been any guide, Home Depot may not be able to hammer it home in Europe either. Wal-Mart has reportedly had financial troubles in Germany and has still not turned a profit there. One stock analyst said that tight zoning laws in Europe had caused big box headaches for Wal-Mart, because unlimited size and locations are not the rule in Europe.
Home Depot pulls in it horns and retrenches. South America was apparently not profitable enough to waste more orange blood. This, of course, is good news for citizens of Argentina and Chile, who local merchants were at risk, and whose characteristic development patterns were also defied by the North American gringos.This withdrdawal has to be seen as a major financial retreat and the unsuccessful end of an expansion blueprint for the company. Que lastima, Home Depot!
