Home Depot to Renovate

Updated from 7:09 a.m. EST

With weakness in the U.S. housing market continuing to plague its business, Home Depot (HD Quote) will seek to reverse course after ousting its CEO and posting a 39% decline in fourth-quarter profits.

On a conference call with analysts Tuesday after the earnings release, the home-improvement retail chain's new CEO, Frank Blake, elaborated on plans to explore strategic options for the company's supply business. His predecessor, Bob Nardelli, steered the company headlong into the supply business with 27 acquisitions over the past two years before he was ousted last month amid intense criticism of his compensation and corporate governance practices.

Blake was a member of the board of directors that approved Nardelli's compensation and failed to show up at last year's controversial shareholders' meeting. Now he faces the prospect of selling off the HD Supply business at a time when its growth has slowed dramatically and Home Depot's retail business is suffering same-store sales declines thanks to a collapsing housing market.

"If it turns out that the best path for creating shareholder value is to hold on to the business, that's what we'll do," Blake said on the conference call.

A New Direction

Home Depot said it hired Lehman Brothers to explore a sale of the division less than two weeks ago, marking a stunning reversal for a company that had previously viewed the supply market as a key expansion area as domestic growth for its retail business slowed.