The decision to convert only 42 of its 89 stores instead of 67 of them means more than 2,600 workers will be let go. The layoffs, including 140 at its headquarters, represent more than 25% of its work force.

Locally, stores will close in Vancouver, Portland, Beaverton and Clackamas. Stores in Seattle will close as well. HomeBase president Herbert Zarkin explained the move by saying "diminished consumer confidence has caused us to question our entry into colder-climate markets, where the outdoor living category of the House2Home concept has yet to be tested."

HomeBase says it will take a $90 million to $100 million after-tax charge associated with the store closures, and now expects to report a net loss of $3.50 to $3.75 per share for the first fiscal quarter ending April 28. For the fiscal year ending in January, the company expects its losses to total $4 to $4.25 a share. Previously, HomeBase said it expected to lose $2.13 a share for the year.