Home Depot's profit drops 24%
NEW YORK -- The Home Depot Inc., the nation's largest home improvement retailer, reported a 24% drop in second-quarter profit on Tuesday and reiterated its downbeat outlook for the year amid a weak housing market that shows no signs of recovery.
The Atlanta-based company said net income fell to $1.2 billion, or 71 cents per share, in the three months ended Aug. 3, from $1.59 billion, or 81 cents per share, a year earlier.
Sales fell 5.4 percent to $21 billion from $22.2 billion in the year-ago period. Same-store sales, or sales at stores opened at least a year, fell 7.9 percent. Same-store sales are considered a key indicator of a retailer's health.
The results did beat the expectations of Wall Street analysts surveyed by Thomson Reuters, who projected earnings per share of 61 cents on revenue of $20.58 billion.
"We continue to see pressure on our market and the consumer, generally," Home Depot's Chairman and CEO Frank Blake said in a statement. Despite the weak economic climate, he noted that the company saw improved execution in its merchandising and operations initiatives during the past quarter.
Its shares rose 54 cents, or 2 percent, to $27.50 in premarket trading.
Home Depot's business has been hurt by the sluggish economy and the housing slowdown, that's also battering its competitors such as Lowe's Cos. Inc.
Lowe's reported Monday that its second-quarter profit fell nearly 8 percent, but managed to top Wall Street expectations as the nation's second-biggest home improvement retailer benefited from customers' efforts to repair last year's drought-stricken gardens, tight expense controls and better-than-expected sales.
Lowe's offered a weaker-than-expected outlook for the third quarter, but raised its guidance for the full year.
To boost business, Home Depot has been trying to offer more locally relevant products in stores while focusing on the do-it-yourself customer and the small repair and remodeling professional. About 70 percent of Home Depot's sales come from homeowners, while the rest come from professionals such as contractors, according to the company.
Amid so much economic uncertainty, Home Depot said Tuesday that it expects earnings per share from continuing operations to decline by 24 percent for the year. Home Depot had said in May that it felt "more comfortable" that it would meet the low end of its full-year guidance for a drop of 19 percent to 24 percent in earnings per share, but did not elaborate. The earnings per-share guidance does not include the company's charge related to the closing of 15 stores and its reduction of 50 stores from its future expansion plan, the company said.
Home Depot also projects that full-year sales should decline by 5 percent.
