Top US home-improvement retailer Home Depot files $54-million quarterly loss
24 Feb 2009
The No.1 home retailer in the US, Home Depot, followed its smaller rival Lowe's in declaring quarterly results today. Even though Lowe's managed to keep its books in the black, Home Depot swung to a fiscal fourth-quarter loss of $54 million Tuesday mostly due to its plan to shut its four smaller home-improvement brands, but adjusted results topped analysts' estimates. It earned $671 million in the year-earlier quarter. (See: No.2 US home-improvement retailer Lowe's reports 60 per cent decline in quarterly profit)
For 2009, Home Depot sees earnings from continuing operations per share falling 7 per cent, sales dropping 9 per cent, and "high single digit negative" comparable-store sales. The latest results included $602 million in charges related to job cuts and the company's exit from some of its businesses. Excluding items, earnings fell to 19 cents.
Revenue decreased 17 per cent to $14.61 billion as same-store sales dropped 13 per cent. Last year's quarter had one extra week of sales compared to this year. Analysts expected earnings of 15 cents on revenue of $14.67 billion. Gross margin fell to 34 per cent from 34.3 per cent.
The number of customer transactions fell 10 per cent as the average amount spent per transaction slid 7.4 per cent.
An economy in recession and the collapse in the credit markets have hit retailers across the board and cut demand, especially for big-ticket purchases and other discretionary spending.
CEO Frank Blake said the company made progress in key areas, improving customer-service ratings, reducing inventory by more than $1 billion and exiting non-core businesses, despite the difficult economic conditions. He added the company expects the home-improvement market in 2009 to be just as challenging as last year.
A wide swath of retailers and their suppliers are controlling inventory and cutting expenses in the face of uncertain sales. In January, Home Depot said it would exit its underperforming Expo design and décor business, close stores and shift to a region and district-based support model in a series of decisions that's expected to cut 7,000 jobs.
The company also announced last month that it was initiating a salary freeze among all officers and lowering capital spending.
