Home Depot 4Q Earnings Off 28%

Atlanta, GA, February 20, 2007--Home Depot reported a 28% decline in fourth quarter net earnings. The company posted net income of $925 million, or $0.46 a share, compared with $1.29 billion, or 60 cents a share, a year earlier. Excluding a four-cent charge related to executive severance, the company's earnings were $0.50 a share.

The company said revenue in the quarter was up 4% to $20.3 billion from $19.49 billion. Sales in the company’s retail segment declined 2.0% to $17.4 billion Same-store sales fell 6.6%.

Analysts has forecast earnings of $0.50 a share and revenue of $20.8 billion.

Sales in the HD Supply segment grew by 64.4 percent to $2.9 billion, reflecting sales from acquired businesses.

For fiscal 2006, earnings per share increased 2.6% to $2.79 on net earnings of $5.8 billion, compared to diluted earnings per share of $2.72 on net earnings of $5.8 billion in fiscal 2005.

Net sales fir 2006 were $90.8 billion, an 11.4 percent increase over fiscal 2005. Sales in the retail segment were $79.0 billion in 2006 an increase 2.6%, driven by new stores. Same-store sales for the year declined 2.8 percent.

Fiscal 2006 net sales in the HD Supply segment were $12.1 billion, an increase of 161.6%, driven by solid organic growth and sales from acquired businesses.

"Reflecting the challenging housing market, our 2006 retail results were disappointing," said Frank Blake, chairman & CEO. "We may not be able to impact the housing market or general economic conditions, but we know that we can improve our performance relative to our overall market share. That will be a central point of emphasis for us in 2007 and beyond."

"As tough as 2006 was for our retail business, our strong financial condition allowed us to invest in the business and return significant dollars to our shareholders," said Carol Tome, CFO & executive vice president - Corporate Services.

"The investments we are making will continue to improve associate engagement and the overall shopping experience in our stores," said Joe DeAngelo, COO & executive vice president. "Our associates across The Home Depot enterprise should be extremely proud of their efforts in 2006 to provide great service to all of our customers."

"Despite the slowing home improvement market, we are encouraged as we head into spring with an expanded assortment in outdoor power equipment, landscape products, and a new patio and grill line-up," said Craig Menear, senior vice president, Merchandising. "In 2007 customers will see us focus on product excitement and creating a compelling value proposition in our stores."

On February 28 during its annual Investor and Analyst Conference, The Home Depot will present its business strategy and financial outlook for fiscal 2007. An audio webcast of the conference will be available at homedepot.com in the Investor Relations section.