Home Depot Inc. saw its Q3 net income fall 27% as same store sales were down 6.2% Y/Y and the housing slump continued to hurt profits at the nation's largest home improvement store. Shares fell 3.06% in pre-market action on the news; through Monday Home Depot was down 29% YTD, well on the way to its third consecutive annual loss in share value. Net income was $1.09 billion, good for EPS of $0.60, versus net income of $1.49 billion and EPS of $0.73 a year ago. Aggressive share repurchases by Home Depot kept EPS down less (-21.6%) than overall net income (-27%). Earnings from continuing operations came in at $0.59; on that basis, Wall Street was expecting earnings of $0.60 per share. Sales fell 3.5% to $18,96 billion, versus $19.65 billion a year earlier. Analysts were expecting sales of $19.43 billion. The company now expects earnings from continuing operations to fall by as much as 11% in FY2007. In September, sales of previously-owned U.S. homes were reported at at-least an eight-year low (records first started being kept in 1999), while housing starts fell to a 14-year low in October (full story). Falling home sales have hit Home Depot especially hard as demand has declined sharply for cabinets, bathroom and kitchen renovations. Home Depot has also lost market share to largest competitor Lowe's on poor customer service, something the company is spending $2 billion on during the current fiscal year to rectify. Reflecting on his company's latest results, CEO Frank Blake said, "We are facing a tough environment as housing indicators continue to deteriorate. Our financial performance in the third quarter reflects these tough conditions," (full earnings call transcript later today).
Commentary: Home Depot: A Buy at Current Levels? • Home Depot Bumps Up EPS Guidance Post-Buyback • Home Depot Slashes Unit Sale Price By 18%
Stocks/ETFs to watch: HD. Competitors: LOW. ETFs: RTH, XLY, XHB, VCR
Earnings call transcript: The Home Depot Q2 2007
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.