Home Depot’s earnings fall 28%
Home Depot Inc.’s new chief executive vowed Tuesday that changes are on the horizon amid a 28% drop in fourth-quarter profit, but he wasn’t quite ready to give details. Shareholders will have to wait until an investor conference next week.
CEO Frank Blake said the world’s largest home improvement store chain would rededicate itself to improving the helpfulness and knowledge of its employees, bettering the shopping environment at its stores, enhancing its products and catering more to professional customers.
Blake was mum on how he planned to achieve those familiar goals.
“These are straightforward priorities and a reasonable question would be, ‘Haven’t you always been working on these?’ ” Blake said.
Blake assured analysts that things would be different under his watch compared to that of his predecessor, Bob Nardelli, who resigned in early January amid a furor over his hefty pay and Home Depot’s lagging stock price.
Home Depot’s fourth-quarter profit drop came despite a 4% gain in overall sales. Sales at stores open at least a year, however, fell in the quarter.
Home Depot cited in part a slowing home improvement market amid a continued slump in the housing sector.
The results were in line with Wall Street expectations, when expenses related to severance payouts to Nardelli and four other executives who left the company in the final fiscal quarter of 2006 are excluded.
The Atlanta-based company said it earned $925 million, or 46 cents a share, for the three months ending Jan. 28, compared with a profit of $1.29 billion, or 60 cents, a year earlier.
Excluding 4 cents a share of expense related to executive severance, the company reported earnings of 50 cents a share. Analysts surveyed by Thomson Financial were expecting earnings of 50 cents a share, excluding one-time items.
Revenue in the quarter rose to $20.27 billion, compared with revenue of $19.49 billion recorded in the same period a year earlier.
Same-store sales, measuring sales at retail stores open at least a year, declined 6.6% in the fourth quarter, Home Depot said. It added that total sales in its retail segment declined 2% in the quarter, though sales in its HD Supply unit grew more than 64% in the quarter, reflecting sales from acquired businesses. Home Depot said its average sales ticket in its retail segment fell to $56.27 in the fourth quarter from $57.20 in the same period a year earlier.
