Home Depot Sees Earnings Decline in 2007

Atlanta, GA, February 28, 2007--Home Depot said Wednesday it will pump $2.2 billion into improving its business this year amid internal projections that show overall sales will grow only slightly and earnings per share will fall.

The company announced its priorities and outlook as it prepared to hold its annual investor conference later in the day.

Home Depot said it expects for all of fiscal 2007 to see total sales growth of flat to 2 percent, sales growth at stores open at least a year in the negative mid-single-digits and an earnings per share decline of 4 percent to 9 percent.

Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1 percent to 2 percent, and earnings per share are expected to decline by 3 percent to 8 percent, Home Depot said.

To improve its business, Home Depot plans to invest $2.2 billion this fiscal year in key areas of its business, including $1.6 billion in capital spending and $600 million in expense.

Home Depot said it will open 115 new stores this year.

It said its goals this year are focused on associate engagement, product excitement, product availability, shopping environment and cultivating the professional customer.

Beyond 2007, the company believes investments made in its retail business will allow retail sales to return to above-market growth rates.

The company said that coupled with its commitment to share repurchases, the company anticipates earnings per share growth of more than 10 percent annually in future years.

And it projected that beyond 2007 it will see an annual sales growth of roughly 5 percent, annual earnings growth greater than 5 percent and annual earnings per share growth of 10 percent or more.