The world's largest home improvement retailer also said on Monday it was freezing the salaries of all officers as it looks to save money in a prolonged retail slump.

Home Depot opened the Expo stand-alone stores 1991. But even during the most recent housing boom, it was not a strong business and has weakened significantly as demand waned for high-priced home improvement projects, the company said.

"We see the announcements as largely positive," Stifel Nicolaus analyst David Schick said in a research note, adding that it made no sense for Home Depot to stick with the Expo business, hoping for long-term growth even as it trims its main operations.

"Expo was profitable in 2007 ... but is unlikely to be for five-plus years," he said.

The closing of Expo will affect about 34 design center stores and 5,000 jobs, with another 2,000 cut as the company eliminates some support staff.

The company expects pretax charges of about $532 million from its actions, including $390 million in the fourth quarter, which ends February 1.

The company will also take additional charges in the fourth quarter over its sale of the HD Supply business in 2007 and its ongoing equity interest in the business. Those charges will be about $55 million related to a dispute on working capital and $163 million for a write-down of its investment in HD Supply.

The company said it still expects sales to decline 8 percent and earnings per share to fall 24 percent from continuing operations for its fiscal year, excluding one-time charges.

For the fiscal year beginning on February 2, Home Depot said it will cut capital spending to about $1 billion and will open 12 stores. The company opened 55 stores in the current fiscal year and expects capital expenditures to be about $1.8 billion.

Home Depot shares rose $1.33, or 6.12 percent, to $23.05 on Monday on the New York Stock Exchange. Rival Lowe's Companies' shares rose 2 percent.

(Reporting by Brad Dorfman, editing by Gerald E. McCormick and Maureen Bavdek)