Home Depot’s Earnings Decline Amid Housing Market Downturn

August 19 2008 - Home Depot Inc. posted a 24% decline in fiscal second-quarter net income as Chief Executive Frank Blake said the company is continuing “to see pressure on our market and the consumer.”

Still, the nation’s largest home-improvement retailer refrained from cutting its fiscal-year outlook again, as Mr. Blake noted, “Despite the macroeconomic conditions, we saw improved execution in our merchandising and operations initiatives during the past quarter.”

The results from Home Depot come as the housing market, tighter credit and higher food and fuel costs have battered many retailers, but especially those that are tied to home repairs or improvements. The environment helped drive the company to record in 2007 its first annual sales decline in its 30-year history. Executives have said this year’s results would be even worse given the difficult and uncertain business conditions.

For the quarter ended Aug. 3, Home Depot reported net income of $1.2 billion, or 71 cents a share, down from $1.59 billion, or 81 cents a share, a year earlier. Prior-year results included a 3-cent gain from discontinued operations. Net revenue fell 5.4% to $20.99 billion. Same-store sales declined 7.9%, or 7.2% on a comparable-week basis. Analysts polled by Thomson Reuters were for looking for earnings of 61 cents a share on $20.58 billion in revenue. Gross margin edged up to 33.2% from 33.1%.

Housing-Market Downturn Hits Home Depot’s Earnings
by DONNA KARDOS | Wall Street Journal