The Home Depot Announces Fourth Quarter Results; Updates Fiscal Year 2011 Guidance

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ATLANTA, Feb. 22, 2011 /CNW/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $15.1 billion for the fourth quarter of fiscal 2010, a 3.8 percent increase from the fourth quarter of fiscal 2009. Comparable store sales for the fourth quarter of fiscal 2010 were positive 3.9 percent, and comp sales for U.S. stores were positive 4.8 percent.

Net earnings from continuing operations for the fourth quarter were $587 million, or $0.36 per diluted share, compared with net earnings from continuing operations of $301 million, or $0.18 per diluted share, in the same period of fiscal 2009. On an adjusted basis, net earnings from continuing operations for the fourth quarter of fiscal 2009 were $402 million or $0.24 per diluted share.

Fourth quarter fiscal 2009 consolidated net earnings of $342 million include $41 million of net earnings from discontinued operations.

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    Fiscal 2010

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Sales for fiscal 2010 were $68.0 billion, an increase of 2.8 percent from fiscal 2009. Total company comparable store sales for the year increased 2.9 percent, and comps for U.S. stores were positive 2.5 percent for the year.

Earnings per diluted share from continuing operations in fiscal 2010 were $2.01, compared to $1.55 per diluted share from continuing operations in fiscal 2009, an increase of 29.7 percent.

Fiscal 2010 results reflect a first quarter net impact to earnings of $33 million related to the extension of the Company's guarantee of an HD Supply senior secured loan. In fiscal 2009, results include strategic charges recorded earlier in the year and the write-down of the Company's investment in HD Supply. On an adjusted basis, the Company reported fiscal 2010 net earnings from continuing operations of $3.4 billion, or $2.03 per diluted share, compared with adjusted net earnings from continuing operations of $2.8 billion, or $1.66 per diluted share, for fiscal 2009.

For fiscal 2010, consolidated net earnings per diluted share were $2.01 on consolidated net earnings of $3.3 billion, compared to consolidated net earnings per diluted share of $1.57 on net earnings of $2.7 billion in fiscal 2009.

"In 2010, we continued to invest in our business and made solid progress against our key initiatives," said Frank Blake, chairman & CEO. "We completed the rollout of our Rapid Deployment Centers, an important part of our distribution network; we saw year-over-year improvement in customer service ratings; and we continued progress on our merchandising transformation. Our actions, coupled with an improving economy, resulted in positive sales growth for the year, the first time since 2006.

"Our associates did an outstanding job in 2010," said Blake. "Their hard work and dedication made these accomplishments possible."

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    Dividend Increase

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The Company today announced that its board of directors declared a 6 percent increase in its quarterly cash dividend to 25 cents per share. "As a testament to our confidence in the Company's strategic initiatives and our commitment to returning capital to our shareholders, the board increased the dividend for the second consecutive year," said Blake. "It is our intent to increase our dividend every year. Our longer-term targeted dividend payout ratio is 40 percent." The dividend is payable on March 24, 2011, to shareholders of record on the close of business on March 10, 2011. This is the 96th consecutive quarter the Company has paid a cash dividend.

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    Updated Fiscal 2011 Guidance

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Today the Company updated its fiscal 2011 guidance and now expects sales to be up approximately 2.5 percent for the year. The Company expects diluted earnings per share from continuing operations to be up approximately 9.5 percent to $2.20, excluding the impact of future share repurchases. Using excess cash, the Company intends to repurchase approximately $2.5 billion of outstanding shares throughout the year.

The Company gave the following additional guidance for fiscal 2011, in-line with the guidance it provided to investors and analysts in December 2010:

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    --  Positive low single digit comparable store sales growth
    --  10 new stores
    --  Moderate gross margin expansion
    --  Modest expense leverage
    --  Operating margin expansion of approximately 40 basis points
    --  Tax rate of approximately 37%
    --  Capital spending of approximately $1.35 billion
    --  Depreciation and amortization expense of approximately $1.7 billion
    --  Cash flow from the business of approximately $5.7 billion

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The Home Depot will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at http://earnings.homedepot.com.

At the end of the fourth quarter, the Company operated a total of 2,248 retail stores, which included 1,976 The Home Depot stores in the United States (including the Commonwealth of Puerto Rico, the territory of the U.S. Virgin Islands and the territory of Guam), 179 stores in Canada, 85 stores in Mexico and 8 stores in China. The Company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.

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To provide clarity, internally and externally, about the Company's operating performance for recently completed fiscal periods, the Company supplemented its reporting with non-GAAP financial measures to reflect the impact of the store rationalization charges, business rationalization charges, related restructuring charges, an investment impairment charge related to HD Supply and the charge related to the extension of the Company's guarantee of the HD Supply senior secured loan. The Company believes that these non-GAAP financial measures better enable management and investors to understand and analyze the Company's performance by providing them with meaningful information relevant to events of unusual nature or frequency that impact the comparability of underlying business results from period to period. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP financial measures to the comparable GAAP measures can be found attached to this press release and at http://earnings.homedepot.com.

Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of the residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, inventory and in-stock positions, commodity price inflation and deflation, implementation of store initiatives, implementation of supply chain initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the effect of accounting charges, the planned recapitalization of the Company and the timing of its completion, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, fiscal 2011 guidance and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties - many of which are beyond our control or are currently unknown to us - as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended January 31, 2010, and in Part II, Item 1A, "Risk Factors" and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended October 31, 2010.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

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                   THE HOME DEPOT, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
      FOR THE THREE MONTHS AND FISCAL YEARS ENDED JANUARY 30, 2011 AND
                              JANUARY 31, 2010
                                (Unaudited)
     (Amounts in Millions Except Per Share Data and as Otherwise Noted)
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                                                                 %
                                      Three Months Ended              Increase
                                   1-30-11      1-31-10   (Decrease)
                                   -------      -------   ----------
    NET SALES                       $15,126      $14,569         3.8%
    Cost of Sales                     9,883        9,556         3.4
                                      -----        -----
      GROSS PROFIT                    5,243        5,013         4.6
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    Operating Expenses:
       Selling, General and
        Administrative                3,807        3,869        (1.6)
       Depreciation and
        Amortization                    399          417        (4.3)
                                        ---          ---
         Total Operating Expenses     4,206        4,286        (1.9)
                                      -----        -----
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OPERATING INCOME 1,037 727 42.6

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    Interest and Other (Income)
     Expense:
      Interest and Investment
       Income                            (4)          (3)       33.3
      Interest Expense                   91          161       (43.5)
      Other                               -          163      (100.0)
                                        ---          ---
         Interest and Other, net         87          321       (72.9)
                                        ---          ---
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    EARNINGS FROM CONTINUING
     OPERATIONS
       BEFORE PROVISION FOR INCOME
        TAXES                           950          406       134.0
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    Provision for Income Taxes          363          105       245.7
                                        ---          ---
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    EARNINGS FROM CONTINUING
     OPERATIONS                         587          301        95.0
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    EARNINGS FROM DISCONTINUED
     OPERATIONS, NET OF TAX               -           41      (100.0)
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      NET EARNINGS                     $587         $342        71.6%
                                       ====         ====
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    Weighted Average Common
     Shares                           1,614        1,679       (3.9)%
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    BASIC EARNINGS PER SHARE
     FROM CONTINUING OPERATIONS       $0.36        $0.18       100.0
    BASIC EARNINGS PER SHARE
     FROM DISCONTINUED
     OPERATIONS                          $-        $0.02      (100.0)
    BASIC EARNINGS PER SHARE          $0.36        $0.20        80.0
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    Diluted Weighted Average
     Common Shares                    1,626        1,691       (3.8)%
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    DILUTED EARNINGS PER SHARE
     FROM CONTINUING OPERATIONS       $0.36        $0.18       100.0
    DILUTED EARNINGS PER SHARE
     FROM DISCONTINUED
     OPERATIONS                          $-        $0.02      (100.0)
    DILUTED EARNINGS PER SHARE        $0.36        $0.20        80.0



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                                                                 %
                                      Fiscal Year Ended               Increase
                                   1-30-11      1-31-10   (Decrease)
                                   -------      -------   ----------
    NET SALES                       $67,997      $66,176         2.8%
    Cost of Sales                    44,693       43,764         2.1
                                     ------       ------
      GROSS PROFIT                   23,304       22,412         4.0
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    Operating Expenses:
       Selling, General and
        Administrative               15,849       15,902        (0.3)
       Depreciation and
        Amortization                  1,616        1,707        (5.3)
                                      -----        -----
         Total Operating Expenses    17,465       17,609        (0.8)
                                     ------       ------
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OPERATING INCOME 5,839 4,803 21.6

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    Interest and Other (Income)
     Expense:
      Interest and Investment
       Income                           (15)         (18)      (16.7)
      Interest Expense                  530          676       (21.6)
      Other                              51          163       (68.7)
                                        ---          ---
         Interest and Other, net        566          821       (31.1)
                                        ---          ---
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    EARNINGS FROM CONTINUING
     OPERATIONS
       BEFORE PROVISION FOR INCOME
        TAXES                         5,273        3,982        32.4
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    Provision for Income Taxes        1,935        1,362        42.1
                                      -----        -----
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    EARNINGS FROM CONTINUING
     OPERATIONS                       3,338        2,620        27.4
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    EARNINGS FROM DISCONTINUED
     OPERATIONS, NET OF TAX               -           41      (100.0)
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      NET EARNINGS                   $3,338       $2,661        25.4%
                                     ======       ======
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    Weighted Average Common
     Shares                           1,648        1,683       (2.1)%
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    BASIC EARNINGS PER SHARE
     FROM CONTINUING OPERATIONS       $2.03        $1.56        30.1
    BASIC EARNINGS PER SHARE
     FROM DISCONTINUED
     OPERATIONS                          $-        $0.02      (100.0)
    BASIC EARNINGS PER SHARE          $2.03        $1.58        28.5
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    Diluted Weighted Average
     Common Shares                    1,658        1,692       (2.0)%
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    DILUTED EARNINGS PER SHARE
     FROM CONTINUING OPERATIONS       $2.01        $1.55        29.7
    DILUTED EARNINGS PER SHARE
     FROM DISCONTINUED
     OPERATIONS                          $-        $0.02      (100.0)
    DILUTED EARNINGS PER SHARE        $2.01        $1.57        28.0



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                                                          %
    SELECTED HIGHLIGHTS (1)     Three Months Ended             Increase
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                             1-30-11      1-31-10  (Decrease)
                             -------      -------  ----------
    Number of Customer
     Transactions                 292          288        1.4%
    Average Ticket (actual)    $51.31       $50.01        2.6
    Weighted Average Weekly
     Sales per
        Operating Store (in
         thousands)
                                 $514         $494        4.0
    Square Footage at End of
     Period                       235          235          -
    Capital Expenditures         $407         $398        2.3
    Depreciation and
     Amortization (2)            $426         $442      (3.6)%



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                                                          %
    SELECTED HIGHLIGHTS (1)     Fiscal Year Ended              Increase
    -----------------------
                             1-30-11      1-31-10  (Decrease)
                             -------      -------  ----------
    Number of Customer
     Transactions               1,306        1,274        2.5%
    Average Ticket (actual)    $51.93       $51.76        0.3
    Weighted Average Weekly
     Sales per
        Operating Store (in
         thousands)
                                 $581         $563        3.2
    Square Footage at End of
     Period                       235          235          -
    Capital Expenditures       $1,096         $966       13.5
    Depreciation and
     Amortization (2)          $1,718       $1,806      (4.9)%
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    (1) Includes continuing operations only.
    (2) Includes depreciation of distribution centers and tool rental
    equipment included in Cost of Sales and amortization of deferred
    financing costs included in Interest Expense.


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                  THE HOME DEPOT, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN
                          ADJUSTMENTS (NON-GAAP)
     FOR THE THREE MONTHS AND FISCAL YEARS ENDED JANUARY 30, 2011 AND
                             JANUARY 31, 2010
                               (Unaudited)
               (Amounts in Millions Except Per Share Data)
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                                     Three Months Ended 1-30-11
                                     --------------------------
                         Actuals             Adjustment         As Adjusted
                         -------             ----------         -----------
                                                                 (Non-GAAP)
                                                                 ----------
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Net Sales $15,126 $- $15,126

Gross Profit 5,243 - 5,243

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     Total Operating
      Expenses                 4,206                     -             4,206
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Operating Income 1,037 - 1,037

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     Interest and Other,
      net                         87                     -                87
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     Earnings from
      Continuing                 587                     -               587
       Operations
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     Earnings from
      Discontinued
      Operations,                  -                     -                 -
       net of tax
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Net Earnings $587 $- $587

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     Diluted Earnings
      Per Share                $0.36                    $-             $0.36
       From Continuing
        Operations
     Diluted Earnings
      Per Share                   $-                    $-                $-
       from Discontinued
        Operations
     Diluted Earnings
      Per Share                $0.36                    $-             $0.36
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                                  Three Months Ended 1-31-10
                                  --------------------------
                         Actuals            Adjustment(2)       As Adjusted
                         -------            -------------       -----------
                                                                 (Non-GAAP)
                                                                 ----------
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Net Sales $14,569 $- $14,569

Gross Profit 5,013 - 5,013

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     Total Operating
      Expenses                 4,286                     -             4,286
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Operating Income 727 - 727

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     Interest and Other,
      net                        321                   163               158
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     Earnings from
      Continuing
      Operations                 301                  (101)              402
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     Earnings from
      Discontinued
      Operations,                 41                     -                41
       net of tax
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Net Earnings $342 $(101) $443

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     Diluted Earnings
      Per Share from           $0.18                $(0.06)            $0.24
       Continuing
        Operations
     Diluted Earnings
      Per Share from           $0.02                    $-             $0.02
       Discontinued
        Operations
     Diluted Earnings
      Per Share                $0.20                $(0.06)            $0.26



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                                      Fiscal Year Ended 1-30-11
                                      -------------------------
                         Actuals            Adjustment(1)       As Adjusted
                         -------            -------------       -----------
                                                                 (Non-GAAP)
                                                                 ----------
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Net Sales $67,997 $- $67,997

Gross Profit 23,304 - 23,304

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     Total Operating
      Expenses                17,465                     -            17,465
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Operating Income 5,839 - 5,839

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     Interest and Other,
      net                        566                    51               515
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     Earnings from
      Continuing               3,338                   (33)            3,371
       Operations
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     Earnings from
      Discontinued
      Operations,                  -                     -                 -
       net of tax
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Net Earnings $3,338 $(33) $3,371

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     Diluted Earnings
      Per Share                $2.01                $(0.02)            $2.03
       From Continuing
        Operations
     Diluted Earnings
      Per Share                   $-                    $-                $-
       from Discontinued
        Operations
     Diluted Earnings
      Per Share                $2.01                $(0.02)            $2.03
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                                   Fiscal Year Ended 1-31-10
                                   -------------------------
                         Actuals           Adjustments(3)       As Adjusted
                         -------           --------------       -----------
                                                                 (Non-GAAP)
                                                                 ----------
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Net Sales $66,176 $221 $65,955

Gross Profit 22,412 28 22,384

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     Total Operating
      Expenses                17,609                   174            17,435
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Operating Income 4,803 (146) 4,949

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     Interest and Other,
      net                        821                   163               658
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     Earnings from
      Continuing
      Operations               2,620                  (191)            2,811
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     Earnings from
      Discontinued
      Operations,                 41                     -                41
       net of tax
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Net Earnings $2,661 $(191) $2,852

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     Diluted Earnings
      Per Share from           $1.55                $(0.11)            $1.66
       Continuing
        Operations
     Diluted Earnings
      Per Share from           $0.02                    $-             $0.02
       Discontinued
        Operations
     Diluted Earnings
      Per Share                $1.57                $(0.11)            $1.69
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    Note: Certain amounts in Diluted Earnings Per Share may not foot due
    to rounding.
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    (1) Adjustment is comprised of a charge related to the extension of
    the Company's guarantee of a third-party senior secured loan.
    (2) Adjustment is comprised of a charge to write-down the Company's
    investment in HD Supply.
    (3) Adjustments are comprised of store rationalization charges
    related to the closing of 15 stores and the removal of 50 stores
    from our future growth pipeline, business rationalization charges
    related to the exit of EXPO, THD Design Center, Yardbirds and HD
    Bath businesses, as well as net sales, gross profit and operating
    expenses of those exited businesses during the period from closing
    announcement to actual closing, charges related to restructuring of
    support functions and investment impairment charges.




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                     THE HOME DEPOT, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                  AS OF JANUARY 30, 2011 AND JANUARY 31, 2010
                                  (Unaudited)
                             (Amounts in Millions)
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                                                     1-30-11  1-31-10
                                                     -------  -------
     ASSETS
       Cash and Cash Equivalents                         $545   $1,421
       Receivables, net                                 1,085      964
       Merchandise Inventories                         10,625   10,188
       Other Current Assets                             1,224    1,327
          Total Current Assets                         13,479   13,900
                                                       ------   ------
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       Property and Equipment, net                     25,060   25,550
       Goodwill                                         1,187    1,171
       Other Assets                                       399      256
          TOTAL ASSETS                                $40,125  $40,877
                                                      =======  =======
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     LIABILITIES AND STOCKHOLDERS' EQUITY
       Accounts Payable                                $4,717   $4,863
       Accrued Salaries and Related Expenses            1,290    1,263
       Current Installments of Long-Term Debt           1,042    1,020
       Other Current Liabilities                        3,073    3,217
          Total Current Liabilities                    10,122   10,363
                                                       ------   ------
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       Long-Term Debt                                   8,707    8,662
       Other Long-Term Liabilities                      2,407    2,459
          Total Liabilities                            21,236   21,484
                                                       ------   ------
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       Total Stockholders' Equity                      18,889   19,393
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $40,125  $40,877
                                                      =======  =======






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                        THE HOME DEPOT, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR FISCAL YEARS ENDED JANUARY 30, 2011 AND JANUARY 31, 2010
                                     (Unaudited)
                                (Amounts in Millions)
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                                                           Fiscal Year Ended
                                                        1-30-11      1-31-10
                                                        -------      -------
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Earnings                                          $3,338       $2,661
    Reconciliation of Net Earnings to Net Cash Provided
     by Operating Activities:
         Depreciation and Amortization                     1,718        1,806
         Impairment of Investment                              -          163
         Stock-Based Compensation Expense                    214          201
         Changes in Working Capital and Other               (685)         294
         Net Cash Provided by Operating Activities         4,585        5,125
                                                           -----        -----
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    CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital Expenditures                                  (1,096)        (966)
    Other                                                     84          211
         Net Cash Used in Investing Activities            (1,012)        (755)
                                                          ------         ----
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    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Long-Term Borrowings, net of discount      998            -
    Repayments of Long-Term Debt                          (1,029)      (1,774)
    Repurchases of Common Stock                           (2,608)        (213)
    Cash Dividends Paid to Stockholders                   (1,569)      (1,525)
    Other                                                   (243)           9
        Net Cash Used in Financing Activities             (4,451)      (3,503)
                                                          ------       ------
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(Decrease) Increase in Cash and Cash Equivalents (878) 867

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    Effect of Exchange Rate Changes on Cash and Cash
     Equivalents                                               2           35
    Cash and Cash Equivalents at the Beginning of the
     Period                                                1,421          519
                                                           -----          ---
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    Cash and Cash Equivalents at the End of the Period      $545       $1,421
                                                            ====       ======





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SOURCE The Home Depot

For further information: Financial Community: Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666, diane_dayhoff@homedepot.com; News Media: Ron DeFeo, Sr. Director, Corporate Communications, +1-770-384-3179, ron_defeo@homedepot.com Web Site: http://www.homedepot.com


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