Home Depot Profit Drops on U.S. Housing Slowdown

[marmar]

from Bloomberg:



Home Depot Profit Drops on U.S. Housing Slowdown (Update2)

By Mark Clothier

Feb. 26 (Bloomberg) -- Home Depot Inc., the world's largest home-improvement retailer, said fourth-quarter profit fell and forecast earnings below analysts' estimates after the deepest housing slump in a quarter century showed no sign of receding.

Home Depot declined in trading before U.S. exchanges opened.

Net income dropped 27 percent to $671 million, or 40 cents a share, from $925 million, or 46 cents, a year earlier, Home Depot said today in a statement. Profit trailed analysts' projections by 3 cents. Sales rose 1.5 percent to $17.7 billion.

Sales will fall as much as 5 percent during a ``challenging'' 2008, Chief Executive Officer Frank Blake said in the statement. He took over 13 months ago, pledging to spend $2 billion to revamp retail stores and service. Home Depot has lost market share to Lowe's Cos. as both companies struggle with declining U.S. home values.

``Consumers are still buying masking tape and light bulbs, but the need to do a kitchen remodel is obviously getting pushed out,'' Laura Champine, an analyst with Morgan Keegan Inc. in New York, said yesterday. Champine is one of 11 analysts with a neutral rating on Atlanta-based Home Depot. Ten suggest buying the stock and one says ``sell.''

Earnings per share from continuing operations will decline 19 percent to 24 percent for the year that ends February 2009, Home Depot said. That's equivalent to a range of about $1.73 to $1.84 a share. Analysts surveyed by Bloomberg estimated average profit of $2.10.

Home Depot dropped 57 cents, or 2 percent, to $28.25 at 8:10 a.m. in trading before the New York Stock Exchange opened. The shares gained 7 percent this year through yesterday after three straight annual declines. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a.Nbmmadhmnc&refer=home

[Raven]

1. Very interesting, very different. In the '80's when the housing

market went bust, people who couldn't sell their homes renovated like crazy. This time around people must be tapped out, over their credit lines and scared.

[DainBramaged]

2. Home Depot is the Walmart of the home improvement sector of big box stores

They used to hire professionals. Now they hire no one to help.

[Not Me]

3. Ain't that the truth...

I went there to look for a refrigerator two weeks ago. I ended up walking out; there was NO ONE around to assist.
I bought it at a local appliance store. Perhaps I paid twenty or thirty dollars more...who knows. But I got my questions answered and was treated like a customer. (Imagine that!)

[SoCalDem]

4. Which is precisely why the small Mom & Pop stores stayed in business for so long

The small hardware stores were probably operated in buildings that were paid off long ago, and they knew what their customers wanted/needed, and did not have acres of space to fill up with seventeen styles of the same doo-dad..

They also had absolute control of the hired help's time (usually family or longtimers)..

When business slows at a big-box, LOTS of people lose jobs, and then the stores just fold up and leave...and by then they have often put locals out of business, so now the locals have to drive a long way to the next closest big box that's still open..if they can still afford to buy anything they sell..

Chains are not very loyal to their communities...

[Liberal In Texas]

5. Well, another reason might be why I prefer Lowe's to HD.

HD was holding fund raisers for the GOP and contributing money to them to the exclusion of Democrats. I figured if they're going to do that, I'm shopping elsewhere. We used to spend thousands a year at HD (once buying an expensive shed) but now if I can get it at Lowe's I don't go to HD.

I don't know if they've changed their political bias since the departure of their CEO last year, but until I can be shown that they have, I won't be buying much more than a few screws or something I absolutely can't find at Lowe's or another local vendor. Like the windows we had installed last year. Instead of having HD do the job as we might have done in the past, I found a local company to do it and have been very happy with the work and the price.

They can blame the housing market all they want, but a lot of us out here have gone elsewhere for because of their political activities.

[KharmaTrain]

6. I Gladly Bailed On Them Last Fall...

A year ago, I was offered a "buy-out" on the stock...another tip-off things weren't on the up and up...I had picked up the stock in the late 90's as the housing market was starting to take off. When I found out they were boooshlickers, I wanted to dump 'em, but it kept making money. Then came both the "buy-out" (a sign they were battening down the hatches) and then the Michael Vick mess (he is a Home Depot employee). The stock was tanking most of last year...today's price is way off its high and anyone whose still holding it might as take those stock certificates and use 'em for wallpaper, your money is long gone.

I just heard Allard claiming how the banks and big corporations were going to lead our way out of this "glitch"...and how does he propose? By bailing them out, of course.