Home Depot Inc., which ousted Chief Executive Officer Robert Nardelli last month over compensation, said profit fell 28 percent as the biggest drop in U.S. home sales in 15 years sapped demand for building supplies. Earnings missed analyst estimates.
Net income declined to $925 million, or 46 cents a share, from $1.29 billion, or 60 cents, a year earlier, Atlanta-based Home Depot said today in a statement. Sales for the three months ended Jan. 28 rose 4 percent to $20.3 billion from $19.5 billion.
Sales at Home Depot's retail unit fell 2 percent to $17.4 billion. New CEO Frank Blake plans to offer fewer discounts and more Home Depot workers on the sales floor to compete against Lowe's Cos., according to analysts who have met with him.
From CBS MarketWatch:
Home Depot Inc. delivered a lower fourth-quarter net profit Tuesday, partly as a result of a charge taken to cover executive severance costs. Financial results for the Atlanta-based company and Dow Jones Industrial Average component also reflected the slowdown in the U.S. housing market.
Quarterly sales were similarly sluggish for Home Depot, rising 4% to reach nearly $20.27 billion. Sales at stores open longer than a year, the industry's growth benchmark known as comparable-store sales, fell 6.6%, however.
Home Depot has experienced a large amount of corporate drama over the last few months, largely related to the compensation package of a recently fired CEO.
It's also important to note that overall sales increased 4% for the quarter. That means there was a large one time increase in expenses that hit these numbers as well. In short, there are some pretty big internal negatives outside of the housing slowdown hitting these numbers.
However, that doesn't change the overall picture of the industry. The impact of a slowing housing market is starting to bleed out into the economy as a whole as reflected by the 6.6% drop in same store sales.