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Home Depot Sales Slump

The retailer beat profit estimates, but top-line results missed Wall Street's mark.

Home Depot

(HD) - Get Home Depot, Inc. Report

shares were falling early Tuesday, after the retailer beat adjusted profit expectations despite a slump in profit and sales, but offered underwhelming guidance for the full year.

The Atlanta-based home improvement retailer posted fiscal first-quarter net earnings of $356 million, or 21 cents a share, compared with $1 billion, or 53 cents a share, in the same period a year ago. Excluding a $543 million nonrecurring charge related to the closing of 15 stores and removal of 50 stores from the future growth pipeline, the company earned $697 million, or 41 cents a share.

The adjusted results beat the 37 cents EPS analysts were looking for, according to Thomson Reuters data.

Home Depot generated first-quarter sales of $17.9 billion, down 3.4% from the year-ago quarter and reflecting negative comparable store sales of 6.5%. Analysts were looking fro revenue of $17.61 billion, according to Thomson Reuters.

"The housing and home improvement markets remained difficult in the first quarter; in fact, conditions worsened in many areas of the country," said CEO Frank Blake in the company's earnings release.

"Our decision to close stores and remove planned stores from our pipeline demonstrates our commitment to disciplined capital allocation. This discipline and reinvestment in our existing stores will benefit our shareholders, associates and customers," Blake said.

Home Depot was lately down 79 cents, or 2.7%, to $28.08. Rival Lowe's was off 42 cents, or 1.7%, to $23.83. While the company did not provide guidance in a press release, it offered a

tepid outlook

for the full year.

"While it is early in the year, today we are more comfortable with the low end of our EPS from continuing operations guidance of down 24% from fiscal 2007," said CFO Carol Tomé during the company's conference call Tuesday. During the previous quarter's conference call, Home Depot said it expected earnings per share from continuing operations to decline by 19% to 24%.

Grim outlooks from many retailers clouded the retail landscape ahead of Home Depot's report. On Monday, rival home improvement retailer

Lowe's

(LOW) - Get Lowe's Companies, Inc. Report

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offered lower-than-expected guidance.

Target

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on Tuesday reported drops in comparable store sales and profit in the first quarter.

Wal-Mart

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,

Kohl's

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,

J.C. Penney

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and

Liz Claiborne

(LIZ)

also disappointed Wall Street with grim forecasts for the coming quarters.