Third-quarter earnings at The Home Depot, the world’s largest home-improvement store, plummeted by nearly 30 percent, but the Atlanta-based retailer still squeezed out a profit.
On Tuesday (Nov. 18, 2008), the companyreported fiscal 2008 third-quarter consolidated net earnings of $756 million ($0.45 per diluted share), compared with $1.1 billion ($0.60 per diluted share) in the same period in fiscal 2007. The performance, though dismal, beat analyst expectations by 7 cents a share.
Sales for the third quarter totaled $17.8 billion, a 6.2 percent decrease from the same period the year before. Those figures are based on a 53-week fiscal year in 2007, which shifted the 2008 fiscal calendar.
Excluding the calendar shift, the company's “like for like comp” for the third quarter was actually down 7.1 percent, according to a company statement.
"The housing and home improvement markets remain challenging. Across our entire business, we are making the adjustments necessary to respond to a tough market environment," said Frank Blake, the company’s chairman & CEO.
Home Depot now projects that fiscal 2008 sales could be down as much as 8 percent for the year and earnings per share down by about 24 percent.
The company has slashed prices on more than 1,000 items in its 2,268 retail stores. Wayne Hood, an analyst for BMO Capital Markets in Atlanta, said he’d like to see prices cut even deeper to spur sales volume.
“You could argue that you could continue to drive those margins and offer consumers even lower prices to try to stimulate greater volume,” Hood told The Atlanta Journal-Constitution.
Hood added: “For Home Depot and Lowe’s to do well, it’s not enough to have small repair projects. It has to be driven by big-ticket projects. That’s where the real leverage is.”