Atlanta, GA, June 25--Home Depot Inc. Chief Financial Officer Carol Tome reiterated the home improvement giant's guidance that earnings will increase 9% to 14% on a sales increase of 9% to 12% for the fiscal year ending January 2004.
Speaking at the William Blair & Co. growth stock conference broadcast on the Internet, Tome said Home Depot doesn't provide quarterly guidance but expects comparable-store sales will be under pressure until the back half of the year. Home Depot had stronger same-store sales a year ago, making the year-to-year comparison more difficult, she said.
Tome, who had reiterated Home Depot's earnings and sales guidance less than a week ago at a similar conference, said second-quarter comparable store sales continue to track ahead of the 1.6% decline in the first quarter.
The Atlanta company's view implies 2003 per-share earnings of between $1.70 and $1.78, compared with $1.56 last year. Analysts surveyed by Thomson First Call (News - Websites) produced a mean earnings estimate of $1.73.
Home Depot CFO Tome also reiterated plans to spend $250 million this year on remodeling stores. Home Depot completed major overhauls on six stores in the first quarter and launched another 22 this quarter.
Technology is another focus area for company investment, she said. Home Depot will spend $360 million on new systems for financial reporting, human resources, point of sale and merchandising analysis. "The bad news is that we underinvested in technology" in recent years, Tome said. "The good news is that we are investing today and we will leapfrog our competitors because we will bring forth the best in class."
Also good news is that Home Depot's legacy systems are so old that the company won't have to write down the value of the assets, she said.
Home Depot last year began a major remodeling of its stores, workers and organizational structure. "The transformation we started a year ago is starting to show results, but I can't minimize the challenges we have ahead of us," Tome said. "We have a growing number of resets and remodels ahead of us, but we cannot and we will not lose focus on sales, service and execution."
The company continues to alter its product lineups and has met some success in doing so, Tome said. The company has added a new array of closet and shelving to several test stores, and the category has outperformed its plan by 218%, Tome said. Closet and shelving represents an $8.5 billion market opportunity, with a new closet alone generating an average price ticket of $2,700, she said. Home Depot will put the category in 550 stores by year end.
Home Depot plans to hold more "Do It Herself" clinics across the country in coming months, Tome said. The clinics, which taught women how to do basic home- improvement projects, attracted more than 40,000 women in May and generated more positive media coverage than the company had seen in nine years, she said.
