Home Depot 3Q Earnings Off 3%
Atlanta, GA, November 14, 2006--Home Depot, in the third quarter reported net earnings that were off 3% to $1.5 billion, or 73 cents per diluted share, compared with $1.5 billion, or 72 cents per diluted share in the same period in fiscal 2005.
Analysts were looking for 75 cents per share.
Sales for the third quarter of fiscal 2006 totaled $23.1 billion, an 11.3 percent increase from the third quarter of fiscal 2005.
Total sales in the retail segment grew 1.1 percent to $19.7 billion. Comparable store sales declined 5.1 percent in the third quarter. The U.S. retail home improvement market has slowed significantly due to a slowing overall economy, declining home prices and equity extraction, and slowing housing turnover.
Total sales in HD Supply grew by 159 percent to $3.5 billion, driven by acquisitions as well as organic growth.
"In the face of a very challenging housing environment, our associates showed an unwavering focus on taking care of our customers, and I want to thank them for their hard work and dedication," said Bob Nardelli, chairman, president & CEO. "Our sales performance was softer than we anticipated, but I believe we are making the right decisions to strengthen our core retail business and build our HD Supply platform to ensure that we emerge even stronger when the housing cycle rebounds."
In August, The Home Depot outlined an accelerated store reinvestment program designed to enhance the customer experience, including a richer store staffing model, a rapid refresh program to reset 100 bays in 540 stores, and a $30 million customer service incentive program for associates and stores. The Company is investing an additional $350 million in the second half of the year in support of these programs, demonstrating a significant commitment to its retail operations.
"We will continue to use our strong balance sheet to reinvest in our retail stores and return value to our shareholders," said Carol Tome, executive vice president and CFO. "Our disciplined approach to capital allocation resulted in a return on invested capital of 22.3 percent, up 50 basis points from the third quarter of fiscal 2005."
In the third quarter, the Company repurchased 24 million shares. Since its share repurchase program began in 2002, the Company has repurchased 372 million, or approximately 16 percent, of its outstanding shares and spent $13.3 billion under its $17.5 billion authorization.
"Despite the slowing home improvement market, we gained market share in key categories, including hand tools and accessories, tractors, patio furniture, hard flooring and appliances," said Craig Menear, senior vice president, Merchandising. "For the remainder of the year, customers can expect to see innovative merchandise -- including a significant expansion of our holiday decor -- and a compelling value proposition across all categories."
During the quarter, the Company launched several new exclusive product lines, including:
- LG SteamWasher Wild Cherry red - steam washer and dryer offering energy efficiency and water conservation
- Maytag Epic washer and dryer - the washer reduces noise and vibrations, and the dryer reduces fabric snagging
Puresque carpet collection by Beaulieu - carpet that is designed to resist stains and reduce odors in your home
- n:vision CFL light bulbs - compact florescent bulbs that last 10 times longer than traditional incandescent bulbs and are four times more energy efficient
The company's retail Home Services business grew sales by 11.3 percent to $1 billion in the third quarter of fiscal 2006. Categories such as countertops, HVAC and exterior patio reported solid growth. In addition, during the third quarter, the Company acquired Jubilee Home Solutions, a full-service bath remodeling business currently serving four markets: Dallas, Denver, Minneapolis and Kansas City.
Related Topics:LG Hausys, Beaulieu International Group
