BUILDING FOR DO-IT-YOURSELF SUCCESS; HOME DEPOT PLANS EXPANSION IN STATE.

Byline: Gregory J. Wilcox Daily News Staff Writer

In one of California's biggest retail expansions, Home Depot Inc. said Wednesday it plans to spend $850 million to open 61 stores across the state during the next three years, including six in the San Fernando Valley area.

The expansion, which is likely to threaten smaller chains and independent operators, will create about 10,000 new jobs. Atlanta-based Home Depot, already the dominant player in California's do-it-yourself retail sector, cited the state's resurgent economy for the move.

About 40 percent of the new facilities - including stores in Lancaster, Simi Valley, Van Nuys and Woodland Hills - are previously announced projects, according to Lynn Martineau, Home Depot's western division president. Home Depot is negotiating for an added 30 percent of the sites and the remaining 30 percent are in communities, including Agoura Hills and Burbank, where Home Depot would like to locate but is still looking for specific sites.

Home Depot's growth will be almost evenly split between Northern and Southern California. Plans call for 33 stores in the Los Angeles and San Diego areas, 24 in the Sacramento and San Francisco areas and four in the Central Coast.

``Business is very good everywhere for us in California,'' Martineau said. ``The Northern California area probably came out of the recession sooner . . . but Southern California has come out of the recession in the last 12 months.''

Home Depot already operates 95 outlets and employs about 20,000 people in the state.

``This is huge,'' Ted Gibson, chief economist for the California Department of Finance, said of the announcement. ``It's more reflective of the state's strong economy and I think their expectation that construction activity is going to continue to grow, which is an expectation we certainly share.''

Analysts said Home Depot is taking advantage of the growing strength of the state's economy. ``With the recovery of the California economy and population growth, it's a market they want to be a big participant in,'' said David Toung, an analyst at Argus Research in New York.

Asma Usmani, an analyst at Edward Jones & Co. in St. Louis, said the expansion could drive weaker players from the market place. During the past few years the presence of Home Depot, and its smaller competitor, Irvine-based HomeBase Inc., shouldered aside independent chains like Builders Emporium and National Lumber.

Usmani foresees a generally stable price environment for consumers because the company wants to protect its customer base.

``Ultimately it will be the consumer that will benefit from Home Depot's expansion in the California market,'' she said. ``Home Depot hasn't resorted to increasing their prices so they aren't taking advantage of the consumers.''

HomeBase should concentrate on pricing, service and product offerings to remain competitive, Usmani said.

HomeBase stressed Wednesday that it plans to continue competing directly with Home Depot.

HomeBase, which has 48 stores in California including four in the Valley area, is spending about $100 million to remodel 17 stores and open 14 new ones over the next two years.

``Currently over 90 percent of our stores have a Home Depot within three miles of them and we've been able to compete successfully in a lagging economy,'' said Suki Shattuck, HomeBase's director of investor relations. ``Now that we're seeing some improvement in the housing market we think there is room for both of us.''

COMING SOON

Atlanta-based Home Depot plans an aggressive expansion through California over the next three years. Here's the timetable for San Fernando Valley area stores.

Agoura Hills, location unknown, probably opening in 2000.

Burbank, location unknown, probably opening 1999.

Lancaster, Interstate 14 and 20th Avenue, opening summer 1998.

Van Nuys, portion of old General Motors Corp. assembly plant, opening summer 1998.

Woodland Hills, Victory Boulevard and Variel Avenue, opening Jan. 15, 1998.

Simi Valley, Los Angeles Avenue and Cochran Street, opening fall 1998.

Source: Home Depot

CAPTION(S):

2 Photos, Box

PHOTO (1--2--color) Large signs proclaim the arrival next month of a new Home Depot store on Victory Boulevard in Woodland Hills.

David R. Crane/Daily News

BOX: COMING SOON (see text)