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The Home Depot Announces First Quarter Results

ATLANTA, May 19 /PRNewswire-FirstCall/ -- The Home Depot(R), the world's largest home improvement retailer, today reported first quarter of fiscal 2009 net earnings of $514 million, or $0.30 per diluted share, compared with net earnings of $356 million, or $0.21 per diluted share, in the same period in fiscal 2008.

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First quarter of 2009 results reflect a net impact to operating profit of $117 million related to the closing of the EXPO businesses. In the first quarter of 2008, the Company's reported results included charges of $543 million associated with the Company's store rationalization plan. On an adjusted basis, the Company reported first quarter of fiscal 2009 net earnings of $587 million, or $0.35 per diluted share, compared to adjusted net earnings of $697 million, or $0.41 per diluted share, in the same period of fiscal 2008.

Sales for the first quarter totaled $16.2 billion, a 9.7 percent decrease from the first quarter of fiscal 2008. Comparable store sales for the first quarter were negative 10.2 percent, and comp sales for U.S. stores were negative 8.6 percent.

"Our markets, and the consumer in general, remain under pressure," said Frank Blake, chairman & CEO. "But we continue to make progress on improving our business as evidenced by stronger customer satisfaction ratings.

"I want to thank our associates for their hard work and dedication. It is their efforts that enable us to deliver these results."

The Company reaffirmed its guidance for fiscal 2009 of sales down 9 percent with negative comparable store sales in the high single digit area and earnings per share from continuing operations down 7 percent.

On June 10 at 8:30 a.m. ET, the Company will hold its Investor and Analyst Conference to update the investment community on key areas of the business. All presentations will be webcast live at in the Investor Relations section.

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 in the Investor Relations section.

At the end of the first quarter, the Company operated a total of 2,238 retail stores, which included 1,973 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), 178 stores in Canada, 75 stores in Mexico and 12 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.

To provide clarity about the Company's operating performance for the recently completed fiscal quarter, the Company supplemented its reporting of net earnings and earnings per share with non-GAAP measurements to reflect the impact of the store rationalization charge, business rationalization charges, and related restructuring charges. 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. 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, impact of cannibalization, store openings and closures, state of the economy, state of residential construction, housing and home improvement markets, commodity price inflation and deflation, implementation of store initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, capital allocation and expenditures, liquidity, return on invested capital, management of the Company's purchasing or customer credit policies, the effect of charges, the planned recapitalization of the Company, timing of the completion of such recapitalization, the ability to issue debt on terms and at rates acceptable to us 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 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. Such 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 February 1, 2009.

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. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

              FOR THE THREE MONTHS ENDED MAY 3, 2009 AND MAY 4, 2008
        (Amounts in Millions Except Per Share Data and as Otherwise Noted)

                                                  Three Months
                                                     Ended       % Increase
                                               5-3-09    5-4-08  (Decrease)
                                               ------    ------  -----------
    NET SALES                                 $16,175   $17,907         (9.7)%
    Cost of Sales                              10,725    11,835         (9.4)
                                              -------   -------
      GROSS PROFIT                              5,450     6,072        (10.2)

    Operating Expenses:
       Selling, General and Administrative      4,042     4,900        (17.5)
       Depreciation and Amortization              428       444         (3.6)
                                              -------   -------
         Total Operating Expenses               4,470     5,344        (16.4)
                                              -------   -------

      OPERATING INCOME                            980       728         34.6

    Interest (Income) Expense:
      Interest and Investment Income               (5)       (3)        66.7
      Interest Expense                            180       167          7.8
                                              -------   -------
         Interest, net                            175       164          6.7
                                              -------   -------

     TAXES                                        805       564         42.7

    Provision for Income Taxes                    291       208         39.9

                                              -------   -------
      NET EARNINGS                               $514      $356         44.4%
                                              =======   =======

    Weighted Average Common Shares              1,683     1,679          0.2%

    BASIC EARNINGS PER SHARE                    $0.31     $0.21         47.6

    Diluted Weighted Average Common Shares      1,689     1,683          0.4%

    DILUTED EARNINGS PER SHARE                  $0.30     $0.21         42.9

                                                 Three Months
    SELECTED HIGHLIGHTS                              Ended       % Increase
                                               5-3-09    5-4-08   (Decrease)
                                              -------   -------  -----------
    Number of Customer Transactions               310       314         (1.3)%
    Average Ticket (actual)                    $52.67    $57.36         (8.2)
    Weighted Average Weekly Sales
        per Operating Store (in thousands)       $552      $616        (10.4)
    Square Footage at End of Period               235       237         (0.8)
    Capital Expenditures                         $172      $449        (61.7)
    Depreciation and Amortization (1)            $453      $474         (4.4)%

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

                           CONSOLIDATED BALANCE SHEETS
               AS OF MAY 3, 2009, MAY 4, 2008 AND FEBRUARY 1, 2009
                              (Amounts in Millions)

                                               5-3-09     5-4-08       2-1-09
                                              -------    -------      -------
                                            (Unaudited) (Unaudited)  (Audited)

       Cash and Short-Term Investments         $2,220       $779         $525
       Receivables, net                         1,283      1,571          972
       Merchandise Inventories                 11,428     12,637       10,673
       Other Current Assets                     1,383      1,353        1,192
                                              -------    -------      -------
          Total Current Assets                 16,314     16,340       13,362
                                              -------    -------      -------

       Property and Equipment, net             25,894     27,113       26,234
       Goodwill                                 1,134      1,210        1,134
       Other Assets                               425        933          434
                                              -------    -------      -------
          TOTAL ASSETS                        $43,767    $45,596      $41,164
                                              =======    =======      =======

       Short-Term Debt                           $-         $495         $-
       Accounts Payable                         6,901      7,861        4,822
       Accrued Salaries and Related
        Expenses                                1,077      1,029        1,129
       Current Installments of Long-
        Term Debt                               1,768        300        1,767
       Other Current Liabilities                3,802      4,434        3,435
                                              -------    -------      -------
          Total Current Liabilities            13,548     14,119       11,153
                                              -------    -------      -------

       Long-Term Debt                           9,667     11,339        9,667
       Other Long-Term Liabilities              2,558      2,432        2,567
                                              -------    -------      -------
          Total Liabilities                    25,773     27,890       23,387
                                              -------    -------      -------

       Total Stockholders' Equity              17,994     17,706       17,777
                                              -------    -------      -------
           STOCKHOLDERS' EQUITY               $43,767    $45,596      $41,164
                                              =======    =======      =======

                            ADJUSTMENTS (NON-GAAP)
          FOR THE THREE MONTHS ENDED MAY 3, 2009 AND MAY 4, 2008
                (Amounts in Millions Except Per Share Data)

                                               Three Months Ended 5-3-09
                                                                  As Adjusted
                                          Actuals Adjustments(1)    (Non-GAAP)
                                          ------- --------------   -----------

      Net Sales                           $16,175          $221       $15,954

      Gross Profit                          5,450            29         5,421

      Total Operating Expenses              4,470           146         4,324

      Operating Income                        980          (117)        1,097

      Net Earnings                           $514          $(73)         $587

      Diluted Earnings Per Share            $0.30        $(0.04)        $0.35

                                               Three Months Ended 5-4-08
                                                                  As Adjusted
                                          Actuals Adjustments(1)    (Non-GAAP)
                                          ------- --------------   -----------

      Net Sales                           $17,907           $-        $17,907

      Gross Profit                          6,072           (10)        6,082

      Total Operating Expenses              5,344           533         4,811

      Operating Income                        728          (543)        1,271

      Net Earnings                           $356         $(341)         $697

      Diluted Earnings Per Share            $0.21        $(0.20)        $0.41

    Note: Certain amounts in Diluted Earnings Per Share may not foot due to

    (1) Adjustments are comprised of store rationalization charges related to
        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 of those exited businesses during the period from closing
        announcement to actual closing, and charges related to restructuring
        of support functions.
SOURCE The Home Depot
CONTACT: Financial Community: Diane Dayhoff, Vice President of Investor Relations, +1-770-384-2666,;
or News Media: Paula Drake, Sr. Manager, Corporate Communications, +1-770-384-3439,
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