Home Depot’s 3Q Earnings Up 20%, Tops Expectations
Atlanta, GA, November 16-- Home Depot reported record third quarter fiscal 2004 net earnings of $1.3 billion, or $0.60 per diluted share, up 20 percent compared to $0.50 per diluted share for the third quarter fiscal 2003.
Analysts were looking for earnings of $0.57 per share in the quarter.
Sales for the period increased $2.2 billion, or 13.1 percent, to $18.8 billion. Comparable store sales rose 4.5 percent.
Based on the strong third quarter performance, the company announced that it is raising its fiscal 2004 earnings per share growth guidance from 14-17 percent to 19-20 percent.
"The strength of our core retail business, coupled with our growing services and professional supply businesses, is delivering solid returns," said Bob Nardelli, chairman, president & CEO, The Home Depot. "Our business strategy of enhancing the core, extending the business and expanding our markets is clearly driving consistent, profitable sales growth.
"Additionally, in the face of a record number of hurricanes in the Southeast, our stores remained open and our associates and suppliers worked tirelessly to take care of our customers, and I want to thank them."
The company ended the quarter with $39.6 billion in total assets, including $3.4 billion in cash and stockholders' equity of $23.7 billion.
"Our solid financial results drove our return on invested capital to 21.4 percent, up 260 basis points from the third quarter last year," said Carol Tome, executive vice president, CFO, The Home Depot. "Our financial condition remains unparalleled in retail."
"Our results reflect our breadth of merchandise, the benefits of our store modernization program and support from our marketing initiatives," said John Costello, executive vice president of Merchandising and Marketing, The Home Depot. "This is evidenced by a 6.6 percent increase in our average ticket, which reached $55.53, a company record. We experienced average ticket growth across the store because of an enriched merchandising mix of products."
Merchandising highlights in the quarter include:
· Continued product innovation across both hardlines and decor, including Hampton Bay interior lighting and ceiling fans, Ryobi air grip laser level, Charmglow outdoor fireplace products, RIDGID titanium coated saw blades, Porter Cable compressor combo, Masonite doors and Trex composite decking
·Record share in core appliances, up 40% over a year ago, and the tenth consecutive quarterly gain, supported by the rollout of GE Adora, the new Hotpoint Metallic Series and the Americana line
·Continued store modernization, including the Ralph Lauren Color Center, the new Exterior Wood Care Center and resets across a variety of categories
·Expanded multi-channel retailing through homedepot.com, in-store special orders and catalogs
·The nation's largest Tool Rental Center network, opening the 1,000th location
During the quarter, the company opened 38 new stores, including two new urban format stores, one in New York City and one in Park Royal, West Vancouver, British Columbia. "These stores demonstrate another opportunity for new store growth by bringing The Home Depot to previously underserved customers and markets," added Costello.
The company continued to extend its core business in the third quarter, growing services revenues by 26% to $957 million for the quarter.
Services highlights include:
- Offered 23 national installation programs, with plans for more
- Continued strength in services such as carpet, countertops, kitchens and windows, with more than 11,000 installations each day
The company said that its recently acquired White Cap business is exceeding expectations, with strong sales, smooth integration and purchasing synergies. White Cap provides a platform for future growth to large- and mid- sized professional contractors, serving a $400 billion market.
