Subprime takes toll on retailer
Home Depot Inc, the world's largest home-improvement retailer, said fourth-quarter profit fell and forecast earnings below analysts' estimates after the deepest housing slump in a quarter century showed no signs of letting up.
Net income dropped 27 percent to $671 million, or 40 cents a share, from $925 million, or 46 cents, a year earlier, Home Depot said yesterday.
Profit trailed analysts' projections by 3 cents. Sales rose 1.5 percent to $17.7 billion.
Sales will fall as much as 5 percent during a "challenging" 2008, Chief Executive Officer Frank Blake said. He took over 13 months ago with a pledge to spend $2 billion to renovate and improve service at the chain's retail stores.
The retailer has lost market share to Lowe's Cos as both companies struggle with declining US home values.
"Consumers are still buying masking tape and light bulbs, but the need to do a kitchen remodel is obviously getting pushed out," said Laura Champine, an analyst with Morgan Keegan Inc in New York.
Champine is one of 11 analysts with a neutral rating on Atlanta-based Home Depot. Ten suggest buying the stock and one says "sell".
Earnings per share from continuing operations will decline 19 percent to 24 percent next year, Home Depot said. That's equivalent to a range of about $1.73 to $1.84 a share.
Analysts surveyed by Bloomberg estimated average profit of $2.10.
Home Depot increased $1.05, or 3.8 percent, to $28.82 on Monday in New York Stock Exchange composite trading. The shares gained 7 percent this year before yesterday after three straight annual declines.
Twenty analysts in a Bloomberg survey estimated profit of 43 cents a share. Fifteen projected sales of $18 billion.
Agencies
(China Daily 02/27/2008 page17)
