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The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2009 Guidance
ATLANTA, Aug 18, 2009 /PRNewswire-FirstCall via COMTEX/ -- The Home Depot(R), the world's largest home improvement retailer, today reported second quarter of fiscal 2009 net earnings of $1.1 billion, or $0.66 per diluted share, compared with net earnings of $1.2 billion, or $0.71 per diluted share, in the same period in fiscal 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO)

Second quarter of 2009 results reflect a net impact to operating profit of $20 million related to the closing of the Company's EXPO businesses, previously announced on January 26, 2009. Excluding this impact, adjusted earnings per share were $0.67 for the quarter.

The Company's fiscal 2009 second quarter net earnings reflect a tax benefit of approximately $50 million arising from a favorable foreign tax settlement. The tax benefit positively impacted earnings per share by approximately 3 cents.

Sales for the second quarter totaled $19.1 billion, a 9.1 percent decrease from the second quarter of fiscal 2008. Comparable store sales for the second quarter were negative 8.5 percent, and comp sales for U.S. stores were negative 6.9 percent.

"Concerns about the housing market, rising unemployment and softness in the overall economy continue to pressure consumers," said Frank Blake, chairman & CEO. "Our business performed well in a down market, we captured market share and drove operating productivity. The combination made for a solid quarter relative to our plan.

"I want to thank our associates for their hard work in an incredibly tough environment. Their passion and focus on customer service are our strongest competitive advantage."

Updated Fiscal 2009 EPS Guidance

The Company confirmed that it believes that fiscal 2009 sales will be down approximately 9 percent from fiscal 2008. Based on its year-to-date performance, the Company lifted its fiscal 2009 EPS guidance and now expects earnings per share from continuing operations to be flat to up 7 percent from last year. On an adjusted basis, the Company now expects earnings per share from continuing operations to decline by 15 to 20 percent.

The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at homedepot.com in the Investor Relations section.

At the end of the second quarter, the Company operated a total of 2,240 retail stores, which included 1,974 The Home Depot stores in the United States (including the Commonwealth of Puerto Rico, the territory of the U.S. Virgin Islands and the territory of Guam), 178 stores in Canada, 77 stores in Mexico and 11 stores in China. The Company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.

To provide clarity, internally and externally, about the Company's operating performance for the recently completed fiscal quarter, the Company supplemented its reporting of net earnings and earnings per share with non-GAAP measurements to reflect the impact of the store rationalization charge, business rationalization charges, and related restructuring charges. The Company believes that these non-GAAP measurements better enable management and investors to understand and analyze the Company's performance by providing them with meaningful information relevant to events of unusual nature or frequency. However, this supplemental information should not be considered in isolation or as a substitute for the GAAP measurements. A reconciliation of the non-GAAP measurements to the corresponding GAAP measurements can be found in the attached schedule.

Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, store openings and closures, state of the economy, state of residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of the Company's purchasing or customer credit policies, the effect of accounting charges, the planned recapitalization of the Company, timing of the completion of such recapitalization, the ability to issue debt on terms and at rates acceptable to us and financial outlook. Such forward-looking statements are based on currently available information and current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance on our forward-looking statements. Such statements are not guarantees of future performance and are subject to future events, risks and uncertainties - many of which are beyond our control or are currently unknown to us - as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. Such risks and uncertainties include but are not limited to those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended February 1, 2009, and in Part II, Item 1A, "Risk Factors" and elsewhere in our Quarterly Report or Form 10-Q for the fiscal quarter ended May 3, 2009.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update such statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

                           THE HOME DEPOT, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF EARNINGS
     FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 2, 2009 AND AUGUST 3,
                                           2008
                                        (Unaudited)
            (Amounts in Millions Except Per Share Data and as Otherwise Noted)


                         Three Months Ended             Six Months Ended
                                           %                             %
                                        Increase                     Increase
                      8-2-09   8-3-08  (Decrease)  8-2-09   8-3-08  (Decrease)

    NET SALES        $19,071  $20,990     (9.1)%  $35,246  $38,897     (9.4)%
    Cost of Sales     12,683   14,026     (9.6)    23,408   25,861     (9.5)
      GROSS PROFIT     6,388    6,964     (8.3)    11,838   13,036     (9.2)

    Operating Expenses:
      Selling, General
       and
       Administrative  4,121    4,470     (7.8)     8,163    9,370     (12.9)
      Depreciation and
       Amortization      434      452     (4.0)       862      896      (3.8)
        Total Operating
         Expenses      4,555    4,922     (7.5)     9,025   10,266     (12.1)

    OPERATING INCOME   1,833    2,042    (10.2)     2,813    2,770       1.6

    Interest (Income)
     Expense:
      Interest and
       Investment
       Income             (6)      (4)    50.0        (11)      (7)     57.1
      Interest Expense   167      161      3.7        347      328       5.8
        Interest, net    161      157      2.5        336      321       4.7

    EARNINGS BEFORE
     PROVISION FOR
     INCOME TAXES      1,672    1,885    (11.3)     2,477    2,449       1.1

    Provision for
     Income Taxes        556      683    (18.6)       847      891      (4.9)

      NET EARNINGS    $1,116   $1,202     (7.2)%   $1,630   $1,558       4.6%


    Weighted Average
     Common Shares     1,683    1,680      0.2%     1,684    1,680       0.2%

    BASIC EARNINGS
     PER SHARE         $0.66    $0.72     (8.3)     $0.97    $0.93       4.3

    Diluted Weighted
     Average Common
     Shares            1,691    1,685      0.4%     1,690    1,684       0.4%

    DILUTED EARNINGS
     PER SHARE         $0.66    $0.71     (7.0)     $0.96    $0.93       3.2




    SELECTED             Three Months Ended             Six Months Ended
     HIGHLIGHTS                             %                            %
                                        Increase                     Increase
                      8-2-09   8-3-08  (Decrease)  8-2-09   8-3-08  (Decrease)
    Number of
     Customer
     Transactions        362      361      0.3%       672      675      (0.4)%
    Average Ticket
     (actual)         $52.25   $57.58     (9.3)    $52.45   $57.48      (8.8)
    Weighted Average
     Weekly Sales
     per Operating
     Store (in
     thousands)         $650     $707     (8.1)      $600     $662      (9.4)
    Square Footage at
     End of Period       235      237     (0.8)       235      237      (0.8)
    Capital
     Expenditures       $181     $511    (64.6)      $353     $960     (63.2)
    Depreciation and
     Amortization (1)   $458     $482     (5.0)%     $911     $956      (4.7)%


    (1) Includes depreciation of distribution centers and tool rental
    equipment included in Cost of Sales and amortization of deferred financing
    costs included in Interest Expense.


                     THE HOME DEPOT, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
           AS OF AUGUST 2, 2009, AUGUST 3, 2008 AND FEBRUARY 1, 2009
                             (Amounts in Millions)

                                            8-2-09      8-3-08     2-1-09
                                          (Unaudited) (Unaudited) (Audited)

     ASSETS
       Cash and Short-Term Investments        $3,113      $1,062      $525
       Receivables, net                        1,225       1,506       972
       Merchandise Inventories                10,797      11,864    10,673
       Other Current Assets                    1,428       1,402     1,192
           Total Current Assets               16,563      15,834    13,362

       Property and Equipment, net            25,851      27,077    26,234
       Goodwill                                1,168       1,218     1,134
       Other Assets                              416         970       434
           TOTAL ASSETS                      $43,998     $45,099   $41,164

     LIABILITIES AND STOCKHOLDERS' EQUITY
       Accounts Payable                       $6,018      $7,122    $4,822
       Accrued Salaries and Related
        Expenses                               1,159       1,062     1,129
       Current Installments of Long-Term
        Debt                                   1,769         300     1,767
       Other Current Liabilities               3,617       4,153     3,435
          Total Current Liabilities           12,563      12,637    11,153

       Long-Term Debt                          9,661      11,366     9,667
       Other Long-Term Liabilities             2,605       2,447     2,567
          Total Liabilities                   24,829      26,450    23,387

       Total Stockholders' Equity             19,169      18,649    17,777
          TOTAL LIABILITIES AND STOCKHOLDERS'
           EQUITY                            $43,998     $45,099   $41,164



                         THE HOME DEPOT, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN ADJUSTMENTS
                                     (NON-GAAP)
      FOR THE THREE MONTHS AND SIX MONTHS ENDED AUGUST 2, 2009 AND AUGUST 3,
                                       2008
                                    (Unaudited)
                    (Amounts in Millions Except Per Share Data)

                  Three Months Ended 8-2-09        Six Months Ended 8-2-09
                                        As                             As
                          Adjust-    Adjusted            Adjust-    Adjusted
                 Actuals  ments(1)  (Non-GAAP)  Actuals  ments(1)  (Non-GAAP)

    Net Sales    $19,071       $-     $19,071   $35,246     $221     $35,025

    Gross Profit   6,388       (1)      6,389    11,838       28      11,810

    Total
     Operating
     Expenses      4,555       19       4,536     9,025      165       8,860

    Operating
     Income        1,833      (20)      1,853     2,813     (137)      2,950

    Net Earnings  $1,116     $(11)     $1,127    $1,630     $(84)     $1,714

    Diluted
     Earnings
     Per Share     $0.66   $(0.01)      $0.67     $0.96   $(0.05)      $1.01



                  Three Months Ended 8-3-08        Six Months Ended 8-3-08
                                        As                             As
                          Adjust-    Adjusted            Adjust-    Adjusted
                 Actuals  ments(1)  (Non-GAAP)  Actuals  ments(1)  (Non-GAAP)

    Net Sales    $20,990       $-     $20,990   $38,897       $-     $38,897

    Gross Profit   6,964        -       6,964    13,036      (10)     13,046

    Total
     Operating
     Expenses      4,922       18       4,904    10,266      551       9,715

    Operating
     Income        2,042      (18)      2,060     2,770     (561)      3,331

    Net Earnings  $1,202     $(10)     $1,212    $1,558    $(351)     $1,909

    Diluted
     Earnings
     Per Share     $0.71   $(0.01)      $0.72     $0.93   $(0.21)      $1.13

    Note: Diluted Earnings Per Share may not foot due to rounding.

    (1) Adjustments are comprised of store rationalization charges related to
    the closing of 15 stores and the removal of 50 stores from our future
    growth pipeline, business rationalization charges related to the exit of
    EXPO, THD Design Center, Yardbirds and HD Bath businesses, as well as net
    sales, gross profit and operating expenses of those exited businesses
    during the period from closing announcement to actual closing, and charges
    related to restructuring of support functions.

SOURCE The Home Depot

http://www.homedepot.com