The Home Depot Announces Fourth Quarter and Fiscal 2008 Results; Provides Fiscal 2009 Outlook



    ATLANTA, Feb. 24 /CNW/ -- The Home Depot(R), the world's largest home
improvement retailer, today reported a fiscal 2008 fourth quarter consolidated
net loss of $54 million, or a loss of $0.03 per diluted share, compared with
net earnings of $671 million, or $0.40 per diluted share, in the same period
in fiscal 2007.  These results reflect a pre-tax business rationalization
charge of $387 million, a pre-tax write-down of the Company's investment in HD
Supply of $163 million, as well as a loss from discontinued operations of $52
million, net of tax.
    
    (Logo:  http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO )
    
    The business rationalization charge refers to the action the Company took
in the fourth quarter to exit its EXPO, THD Design Center, YardBIRDS and HD
Bath businesses and reduce support staff functions.
    Earnings per diluted share from continuing operations in the fourth
quarter of fiscal 2008 were $0.00, compared to net earnings per diluted share
of $0.40 in the fourth quarter of fiscal 2007.  Excluding the business
rationalization charge and the write-down of the Company's investment in HD
Supply, earnings per diluted share from continuing operations were $0.19 for
the fourth quarter, a decrease of 52.5 percent compared to fourth quarter
2007.
    Sales for the fourth quarter totaled $14.6 billion, a 17.3 percent
decrease from the fourth quarter of fiscal 2007.  The fourth quarter of 2008
consisted of 13 weeks compared with 14 weeks of sales in the fourth quarter of
fiscal 2007.  Excluding the additional week in 2007, sales declined by 12.0
percent from the fourth quarter of fiscal 2007.  Comparable store sales for
the fourth quarter were negative 13.0 percent and were negatively impacted by
the calendar shift in 2008.  Excluding the calendar shift, comparable store
sales were negative 11.5 percent.  Like-for-like comparable store sales for
U.S. stores were negative 9.2 percent.
    
    Fiscal 2008
    
    For fiscal 2008, consolidated earnings per diluted share decreased 43.5
percent to $1.34 on consolidated net earnings of $2.3 billion, compared to
consolidated earnings per diluted share of $2.37 on consolidated net earnings
of $4.4 billion in fiscal 2007.  Fiscal 2008 results reflect a $1.1 billion
charge related to both the recently announced business rationalization charge
of $387 million and the write-down of the Company's investment in HD Supply of
$163 million in the fourth quarter, as well as a $564 million store
rationalization charge related to the closing of 15 stores and the removal of
50 stores from the Company's new store pipeline taken earlier in the year.
Fiscal 2008 results also include a loss from discontinued operations of $52
million, net of tax, or $0.03 per diluted share.
    Earnings per diluted share from continuing operations in fiscal 2008 were
$1.37, compared to $2.27 per diluted share from continuing operations in
fiscal 2007, a decline of 39.6 percent. Excluding the store rationalization
charge, the business rationalization charge and the write-down of the
Company's investment in HD Supply, earnings per diluted share from continuing
operations were $1.78, down 21.6 percent.
    Sales for fiscal 2008 were $71.3 billion, 7.8 percent below fiscal 2007.
Excluding last year's extra week, sales declined by 6.5 percent.  Comparable
store sales for the year declined 8.7 percent and were not meaningfully
impacted by the calendar shift.
    "Despite the difficult economic conditions, the Company made important
progress in key areas," said Frank Blake, chairman & CEO.  "We improved
customer service ratings, as measured by customer surveys and third parties.
We maintained sound inventory control, reducing inventory by over $1 billion
while achieving the best in-stock rate we have had for several years.  We
launched an effective new lower price campaign.  And we made strategic
business decisions, exiting non-core businesses and significantly reducing
square footage growth, which will better position us for the future.  The hard
work and dedication of our associates made these accomplishments possible.
    "We expect the home improvement market in 2009 will remain just as
challenging as 2008, but we will continue to invest in our associates and
stores to set a strong foundation for the long term health of our company,"
said Blake.

    
    2009 Financial Outlook (based on GAAP)
     -- Total sales: decline of approximately 9 percent
     -- Comparable store sales:  high single digit negative
     -- Gross margin: flat to slight expansion
     -- Total expenses as a percent of sales:  flat year over year
          -- Includes approximately $132 million of expense in fiscal 2009
             related to the fourth quarter fiscal 2008 business
             rationalization charge
     -- Operating Margin: flat to slightly up
     -- Tax rate: 36 percent
     -- EPS from continuing operations: decline of approximately 7 percent
     -- Capital expenditures: approximately $1 billion
     -- New stores: 12 net new
     -- Depreciation and amortization expense: approximately $1.9 billion
    


    
    Other Key Items Related to 2009 Financial Outlook
     -- For fiscal 2008, the EXPO, THD Design Center, YardBIRDS and HD Bath
        businesses had sales of $927 million and a net operating loss of
        $43 million.
     -- Assumes no further share repurchases in 2009.
     -- Does not include potential sales lift due to the economic stimulus
        package.
    
    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 homedepot.com in the Investor Relations section.
    At the end of the fourth quarter, the Company operated a total of 2,274
retail stores, which included 1,971 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), 176 stores in Canada, 74 stores in Mexico,
12 stores in China, as well as 2 THD Design Centers, 5 YardBIRDS stores and 34
EXPO Design Center(R) locations. On January 26, 2009, the Company announced
plans to close the EXPO, THD Design Center and YardBIRDS stores as part of the
Company's initiative to focus on its core business. 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. HDE
    To provide clarity about the Company's operating performance for the
recently completed fiscal quarter and year, the Company supplemented its
reporting of earnings per share with non-GAAP measurements to reflect the
impact of the store rationalization charge, business rationalization charge
and investment write-down.  The Company believes such non-GAAP measurements
provide management and investors with meaningful information to understand and
analyze the Company's performance.  However, this supplemental information
should not be considered in isolation or as a substitute for the GAAP
measurements of earnings per share.  A reconciliation of the supplemental
information to the comparable GAAP measurements can be found in the attached
schedule.
    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, store openings and closures, state of the economy, state of the
construction, housing and home improvement markets, reinvestment plans, net
earnings performance, earnings per share, capital allocation and expenditures,
liquidity, the effect of charges and financial outlook.  Such forward-looking
statements are based on currently available information and current
assumptions, expectations and projections about future events.  You are
cautioned not to place undue reliance on our forward-looking statements.  Such
statements 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.  Such risks and
uncertainties include but are not limited to: economic conditions in North
America and in other countries where we operate; possible adverse impact of
such conditions on our customers, including, but not limited to, unemployment,
foreclosures and availability of consumer credit; changes in our cost
structure; and conditions affecting customer transactions and average ticket,
including, but not limited to, improving and streamlining operations and
customers' in-store experience.  Material risks and uncertainties that could
cause actual results to differ materially from our expectations and
projections are described in our Annual Report on Form 10-K for our fiscal
year ended February 3, 2008 and our Quarterly Report on Form 10-Q for our
fiscal quarter ended November 2, 2008.  There also may be other factors that
we cannot anticipate or that are not described herein because we do not
perceive them to be material.  Such factors could cause results to differ
materially from our expectations.  Forward-looking statements speak only as of
the date they are made, and we do not undertake to update such statements
other than as required by law.



    
                      THE HOME DEPOT, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN CHARGES
                                   (NON-GAAP)
    FOR THE THREE MONTHS AND YEARS ENDED FEBRUARY 1, 2009 AND FEBRUARY 3, 2008
                                   (Unaudited)
                   (Amounts in Millions Except Per Share Data)
    


    
                                                                Three Months
                                        Three Months Ended          Ended
                                            2-1-09(1)              2-3-08(1)
                                                          As
                                                        Adjusted
                                                          to
                                                        Exclude
                                                        Charges
                                                Charges  (Non-
                                        Actuals    (3)     GAAP)     Actuals
    

    
    Gross Profit                         $4,960    $(20) $4,980      $6,054
    

    
    Total Operating Expenses              4,694     367   4,327       4,805
    

    
    Operating Income                        266    (387)    653       1,249
    

    
    Interest and Other, net                 297     163     134         192
    

    
    Earnings (Loss) from Continuing
     Operations                              (2)   (329)    327         671
    

    
    Earnings (Loss) from Discontinuing
     Operations, Net of Tax                 (52)    -       (52)        -
    

    
    Net Earnings (Loss)                    $(54)  $(329)   $275        $671
    



    
    Diluted Earnings Per Share from
       Continuing Operations                 $-    $(0.20)  $0.19       $0.40
      Diluted Earnings (Loss) Per Share
       from Discontinuing Operations       $(0.03)   $-    $(0.03)       $-
      Diluted Earnings (Loss) Per Share    $(0.03) $(0.20)  $0.16       $0.40
    



    
                                                                  Year Ended
                                        Year Ended 2-1-09(2)       2-3-08(2)
                                                           As
                                                        Adjusted
                                                           to
                                                         Exclude
                                                        Charges
                                                 Charges  (Non-
                                        Actuals    (3)    GAAP)      Actuals
    

    
    Gross Profit                        $23,990    $(30)  $24,020    $25,997
    

    
    Total Operating Expenses             19,631     921    18,710     18,755
    

    
    Operating Income                      4,359    (951)    5,310      7,242
    

    
    Interest and Other, net                 769     163       606        622
    

    
    Earnings from Continuing
     Operations                           2,312    (684)    2,996      4,210
    

    
    Earnings (Loss) from
     Discontinuing Operations, Net of Tax   (52)      -       (52)       185
    

    
    Net Earnings                         $2,260   $(684)   $2,944     $4,395
    


    
    Diluted Earnings Per Share from
     Continuing Operations                $1.37  $(0.41)    $1.78      $2.27
      Diluted Earnings (Loss) Per Share
       from Discontinuing Operations     $(0.03)     $-    $(0.03)     $0.10
      Diluted Earnings Per Share          $1.34  $(0.41)    $1.75      $2.37
    


    
    Note: Certain amounts in Diluted Earnings (Loss) Per Share may not foot
          due to rounding.
    

    
    (1) The three months ended 2-1-09 includes 13 weeks. The three months
        ended 2-3-08 includes 14 weeks.
    

    
    (2) The year ended 2-1-09 includes 52 weeks. The year ended 2-3-08
        includes 53 weeks.
    

    
    (3) Charges are comprised of store rationalization charges, business
        rationalization charges related to the exit of EXPO, THD Design
        Center, YardBIRDS and HD Bath businesses, charges related to
        restructuring of support functions and an investment impairment
        charge.
    



    
                      THE HOME DEPOT, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
              FOR THE THREE MONTHS AND YEARS ENDED FEBRUARY 1, 2009
                                AND FEBRUARY 3, 2008
                                   (Unaudited)
       (Amounts in Millions Except Per Share Data and as Otherwise Noted)
    


    
                         Three Months Ended (1)         Years Ended (1)
                                            %                           %
                                         Increase                    Increase
                       2-1-09    2-3-08 (Decrease)  2-1-09  2-3-08  (Decrease)
    

    
    NET SALES          $14,607   $17,659   (17.3)%  $71,288  $77,349    (7.8)%
    Cost of Sales        9,647    11,605   (16.9)    47,298   51,352    (7.9)
    

    
      GROSS PROFIT       4,960     6,054   (18.1)    23,990   25,997    (7.7)
    


    
    Operating Expenses:
      Selling, General
       and
       Administrative    4,251     4,353    (2.3)    17,846   17,053     4.7
    

    
      Depreciation and
       Amortization        443       452    (2.0)     1,785    1,702     4.9
    

    
        Total Operating
         Expenses        4,694     4,805    (2.3)    19,631   18,755     4.7
    


    
    OPERATING INCOME       266     1,249   (78.7)     4,359    7,242   (39.8)
    


    
    Interest and Other
     (Income) Expense:
      Interest and
       Investment Income    (5)       (7)  (28.6)       (18)     (74)  (75.7)
    

    
      Interest Expense     139       199   (30.2)       624      696   (10.3)
    

    
      Other                163         -       -        163        -       -
    

    
       Interest and Other,
        net                297       192    54.7        769      622    23.6
    


    
    EARNINGS (LOSS) FROM
     CONTINUING OPERATIONS
     BEFORE PROVISION
     (CREDIT) FOR INCOME
     TAXES                 (31)    1,057  (102.9)     3,590    6,620   (45.8)
    


    
    Provision (Credit)
     for Income Taxes      (29)      386  (107.5)     1,278    2,410   (47.0)
    


    
    EARNINGS (LOSS)
     FROM CONTINUING
     OPERATIONS             (2)      671  (100.3)     2,312    4,210   (45.1)
    


    
    EARNINGS (LOSS)
     FROM DISCONTINUED
     OPERATIONS, NET OF
     TAX                   (52)        -       -        (52)     185  (128.1)
    


    
      NET EARNINGS
       (LOSS)             $(54)     $671  (108.0)%   $2,260   $4,395   (48.6)%
    


    
    Weighted Average
     Common Shares       1,681     1,677     0.2%     1,682    1,849    (9.0)%
    

    
    BASIC EARNINGS PER
     SHARE FROM CONTINUING
     OPERATIONS             $-     $0.40  (100.0)     $1.37    $2.28   (39.9)
    

    
    BASIC EARNINGS (LOSS)
     PER SHARE FROM
     DISCONTINUED
     OPERATIONS         $(0.03)       $-       -     $(0.03)   $0.10  (130.0)
    

    
    BASIC EARNINGS
     (LOSS) PER SHARE   $(0.03)    $0.40  (107.5)     $1.34    $2.38   (43.7)
    


    
    Diluted Weighted
     Average Common
     Shares              1,686     1,680     0.4%     1,686    1,856    (9.2)%
    

    
    DILUTED EARNINGS
     PER SHARE FROM
     CONTINUING
     OPERATIONS             $-     $0.40  (100.0)     $1.37    $2.27   (39.6)
    

    
    DILUTED EARNINGS
     (LOSS) PER SHARE
     FROM DISCONTINUED
     OPERATIONS         $(0.03)       $-      -      $(0.03)   $0.10  (130.0)
    

    
    DILUTED EARNINGS
     (LOSS) PER SHARE   $(0.03)    $0.40  (107.5)     $1.34    $2.37   (43.5)
    




    
                              Three Months Ended (1)      Years Ended (1)
    SELECTED                                  %                         %
     HIGHLIGHTS(2)                         Increase                  Increase
                           2-1-09  2-3-08 (Decrease) 2-1-09  2-3-08 (Decrease)
    Number of Customer
     Transactions             282     314  (10.2)%    1,272   1,336   (4.8)%
    Average Ticket
     (actual)              $50.87  $54.96   (7.4)    $55.61  $57.48   (3.3)
    Weighted Average
     Weekly Sales per
     Operating Store
     (in thousands)          $485    $553  (12.3)      $601    $658   (8.7)
    Square Footage at End
     of Period                238     235    1.3        238     235    1.3
    Capital Expenditures     $436  $1,040  (58.1)    $1,847  $3,388  (45.5)
    Depreciation and
     Amortization (3)        $470    $481   (2.3)%   $1,902  $1,823    4.3 %
    


    
    (1) The three months ended 2-1-09 includes 13 weeks and the three months
        ended 2-3-08 includes 14 weeks. The year ended 2-1-09 includes 52
        weeks and the year ended 2-3-08 includes 53 weeks.  The additional
        week included in the three months and year ended 2-3-08 added
        $1.1 billion to Net Sales and $0.04 to Diluted Earnings per Share.
    

    
    (2) Includes continuing operations only.
    

    
    (3) Includes depreciation of distribution centers and tool rental
        equipment included in Cost of Sales and amortization of deferred
        financing costs included in Interest Expense.
    



    
                      THE HOME DEPOT, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                   AS OF FEBRUARY 1, 2009 AND FEBRUARY 3, 2008
                              (Amounts in Millions)
    

    
                                                    2-1-09            2-3-08
                                                  (Unaudited)        (Audited)
    

    
     ASSETS
       Cash and Short-Term Investments                $525              $457
       Receivables, net                                972             1,259
       Merchandise Inventories                      10,673            11,731
       Other Current Assets                          1,192             1,227
          Total Current Assets                      13,362            14,674
    

    
       Property and Equipment, net                  26,234            27,476
       Goodwill                                      1,134             1,209
       Other Assets                                    434               965
          TOTAL ASSETS                             $41,164           $44,324
    

    
     LIABILITIES AND STOCKHOLDERS' EQUITY
       Short-Term Debt                                $-              $1,747
       Accounts Payable                              4,822             5,732
       Accrued Salaries and Related
        Expenses                                     1,129             1,094
       Current Installments of Long-Term
        Debt                                         1,767               300
       Other Current Liabilities                     3,435             3,833
          Total Current Liabilities                 11,153            12,706
    

    
       Long-Term Debt                                9,667            11,383
       Other Long-Term Liabilities                   2,567             2,521
          Total Liabilities                         23,387            26,610
    

    
       Total Stockholders' Equity                   17,777            17,714
          TOTAL LIABILITIES AND
           STOCKHOLDERS' EQUITY                    $41,164           $44,324

    




For further information:

For further information: Financial Community, Diane Dayhoff, Vice
President of Investor Relations, +1-770-384-2666, diane_dayhoff@homedepot.com;
or News Media, Paula Drake, Sr. Manager, Corporate Communications,
+1-770-384-3439, paula_drake@homedepot.com Web Site: http://www.homedepot.com


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