Atlanta, GA, August 17--Home Depot reported record second quarter net earnings of $1.5 billion, $0.70 per diluted share, up 25 percent, for second quarter fiscal 2004, compared to $0.56 per diluted share, for second quarter fiscal 2003.
The company beat analysts’ estimates of $0.65 per share,
Sales for the period increased $2.0 billion, or 11 percent, to $20.0 billion. Comparable store sales rose 4.8 percent, with strength across all geographic regions. "Our business strategy of enhancing the core, extending the business and expanding our markets is clearly driving consistent, profitable sales growth.
"For the first time in our company's 25-year history, we achieved $20 billion in sales in a single quarter. This achievement demonstrates that our knowledgeable associates are delivering on our company's core purpose: to improve everything we touch," said Bob Nardelli, chairman, president & CEO.
The company ended the quarter with $38.3 billion in total assets, including $3.7 billion in cash and stockholders' equity of $22.5 billion. The company announced that it completed its $6 billion share repurchase program in the second quarter. Earlier this month, the company's board of directors authorized an additional $1 billion share repurchase program, bringing the total to $7 billion.
"Our company remains committed to creating and returning value to our shareholders, as evidenced by our financial results and our dividend and share repurchase programs," added Nardelli. "In the first six months of the year, we have returned $2.8 billion to our shareholders in the form of dividends and share repurchases."
Return on invested capital was 20.4 percent, up 260 basis points from the second quarter last year.
"In addition to our record sales during the second quarter, the company had record operating margin of 12.3 percent, one of the highest in retail, reflecting strong gross margin expansion and good expense control," said Carol Tome, executive vice president, CFO.
In the first half of the year, 52% of the company's stores, along with four store support centers, achieved a payout through The Home Depot's Success Sharing bonus plan. With this program, The Home Depot will be paying out $30 million in September, almost twice as much as was paid out last year.
The company reiterated its fiscal 2004 sales growth guidance of 10-12 percent and increased its fiscal 2004 EPS growth guidance from 10-14 percent to 14-17 percent.
"Strong sales and average ticket growth during our busiest shopping season suggest our distinctive product assortment and knowledgeable associates offered a compelling shopping experience," said John Costello, executive vice president, Merchandising and Marketing. "We are particularly pleased with the breadth of our sales growth across the store."
Average ticket increased 8.2 percent, or $4.13, to $54.73, a second quarter record. The company experienced average ticket growth in every selling category.
"From the front-end to the back-end of our stores, The Home Depot is enhancing the shopping experience, streamlining operations, and driving business efficiency as never before with unprecedented investments in technology," said Bob DeRodes, executive vice president, CIO.
Information Technology highlights include:
- Implemented SAP's core financial systems, improving processing and analytical capabilities
- Completed the rollout of our new human resource management system
- Expanded self-checkout to more than 830 stores, with nearly 250 million transactions to date
- Announced plans to open a new technology center in Austin, Texas
