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The Home Depot Announces Second Quarter Results; Updates Fiscal Year 2011 Guidance

August 16, 2011

ATLANTA, Aug. 16, 2011 /PRNewswire/ — The Home Depot®, the world’s largest home improvement retailer, today reported second quarter of fiscal 2011 net earnings of $1.4 billion, or $0.86 per diluted share, compared with net earnings of $1.2 billion, or $0.72 per diluted share, in the same period of fiscal 2010. For the second quarter of fiscal 2011, diluted earnings per share increased 19.4 percent from the prior year.

(Logo: http://photos.prnewswire.com/prnh/20030502/HOMEDEPOTLOGO )

Sales for the second quarter totaled $20.2 billion, a 4.2 percent increase from the second quarter of fiscal 2010. Comparable store sales for the second quarter were positive 4.3 percent, and comp sales for U.S. stores were positive 3.5 percent.

“Our second-quarter results were driven by a rebound in our seasonal business, storm-related repairs and strength in our core categories,” said Frank Blake, chairman & CEO. “We continue to deliver a strong operating performance while also investing in customer service and our merchandising initiatives. I would like to thank our associates for their hard work and dedication. It is their efforts that enabled us to deliver these results.”

Updated Fiscal 2011 Guidance

The Company confirmed that it expects fiscal 2011 sales will be up approximately 2.5 percent from fiscal 2010. Based on its year-to-date performance and outlook for the balance of the year, the Company raised its fiscal 2011 diluted earnings-per-share guidance and now expects diluted earnings-per-share from continuing operations to be up approximately 16 percent to $2.34 for the year. This earnings-per-share guidance includes the benefit of the Company’s year-to-date share repurchases, but excludes the impact of future share repurchases.

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 earnings.homedepot.com.

At the end of the second quarter, the Company operated a total of 2,245 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and 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.

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, state of the economy, state of the residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, inventory and in-stock positions, commodity price inflation and deflation, implementation of store and supply chain initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, stock-based compensation expense, capital allocation and expenditures, liquidity, the effect of adopting certain accounting standards, return on invested capital, management of our purchasing or customer credit policies, the effect of accounting charges, the planned recapitalization of the Company and the timing of its completion, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, fiscal 2011 guidance and financial outlook. Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You are cautioned not to place undue reliance on our forward-looking statements. These 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. These 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 January 30, 2011, and in Part II, Item 1A, “Risk Factors” and elsewhere in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 1, 2011.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these 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.

                   THE HOME DEPOT, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF EARNINGS
                 FOR THE THREE MONTHS AND SIX MONTHS ENDED
                      JULY 31, 2011 AND AUGUST 1, 2010
                                (Unaudited)
     (Amounts in Millions Except Per Share Data and as Otherwise Noted)
                                           Three Months           %
                                               Ended              Increase
                                      7-31-11      8-1-10        (Decrease)
                                      -------      ------        ----------
    NET SALES                         $20,232      $19,410              4.2%
    Cost of Sales                      13,356       12,828              4.1
                                       ------       ------
      GROSS PROFIT                      6,876        6,582              4.5

    Operating Expenses:
       Selling, General and
        Administrative                  4,186        4,127              1.4
       Depreciation and Amortization      396          406             (2.5)
                                          ---          ---
         Total Operating Expenses       4,582        4,533              1.1
                                        -----        -----

      OPERATING INCOME                  2,294        2,049             12.0

    Interest and Other (Income)
     Expense:
      Interest and Investment Income       (3)          (3)               -
      Interest Expense                    149          151             (1.3)
      Other                                 -            -                -
                                          ---          ---
         Interest and Other, net          146          148             (1.4)
                                          ---          ---

    EARNINGS BEFORE PROVISION FOR
     INCOME TAXES                       2,148        1,901             13.0

    Provision for Income Taxes            785          709             10.7

      NET EARNINGS                     $1,363       $1,192             14.3%
                                       ======       ======

    Weighted Average Common Shares      1,568        1,653            (5.1)%

    BASIC EARNINGS PER SHARE            $0.87        $0.72             20.8

    Diluted Weighted Average
     Common Shares                      1,577        1,663            (5.2)%

    DILUTED EARNINGS PER SHARE          $0.86        $0.72             19.4

                                          Three Months              %
    SELECTED HIGHLIGHTS                       Ended             Increase
    -------------------
                                      7-31-11      8-1-10        (Decrease)
                                      -------      ------        ----------
    Number of Customer
     Transactions                         373          369              1.1%
    Average Ticket (actual)            $54.04       $52.30              3.3
    Weighted Average Weekly Sales
        per Operating Store (in
         thousands)                      $690         $662              4.2
    Square Footage at End of
     Period                               235          235                -
    Capital Expenditures                 $270         $240             12.5
    Depreciation and Amortization
     (1)                                 $425         $428            (0.7)%


                                            Six Months                %
                                              Ended               Increase
                                      7-31-11       8-1-10       (Decrease)
                                      -------       ------
    NET SALES                         $37,055      $36,273           2.2%
    Cost of Sales                      24,351       23,897           1.9
                                       ------       ------
      GROSS PROFIT                     12,704       12,376           2.7

    Operating Expenses:
       Selling, General and
        Administrative                  8,195        8,205          (0.1)
       Depreciation and Amortization      793          817          (2.9)
                                          ---          ---
         Total Operating Expenses       8,988        9,022          (0.4)
                                        -----        -----

      OPERATING INCOME                  3,716        3,354          10.8

    Interest and Other (Income)
     Expense:
      Interest and Investment Income       (5)          (7)        (28.6)
      Interest Expense                    290          293          (1.0)
      Other                                 -           51        (100.0)
                                          ---          ---
         Interest and Other, net          285          337         (15.4)
                                          ---          ---

    EARNINGS BEFORE PROVISION FOR
     INCOME TAXES                       3,431        3,017          13.7

    Provision for Income Taxes          1,256        1,100          14.2

      NET EARNINGS                     $2,175       $1,917          13.5%
                                       ======       ======

    Weighted Average Common Shares      1,585        1,666         (4.9)%

    BASIC EARNINGS PER SHARE            $1.37        $1.15          19.1

    Diluted Weighted Average
     Common Shares                      1,595        1,676         (4.8)%

    DILUTED EARNINGS PER SHARE          $1.36        $1.14          19.3

                                           Six Months               %
    SELECTED HIGHLIGHTS                      Ended             Increase
    -------------------
                                      7-31-11       8-1-10       (Decrease)
                                      -------       ------
    Number of Customer
     Transactions                         689          692         (0.4)%
    Average Ticket (actual)            $53.72       $52.41           2.5
    Weighted Average Weekly Sales
        per Operating Store (in
         thousands)                      $634         $621           2.1
    Square Footage at End of
     Period                               235          235             -
    Capital Expenditures                 $469         $407          15.2
    Depreciation and Amortization
     (1)                                 $849         $866         (2.0)%
    (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.

                  THE HOME DEPOT, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
         AS OF JULY 31, 2011, AUGUST 1, 2010 AND JANUARY 30, 2011
                               (Unaudited)
                          (Amounts in Millions)
                                               7-31-11     8-1-10      1-30-11
                                               -------     ------      -------
     ASSETS
       Cash and Cash Equivalents                $2,551      $2,395        $545
       Receivables, net                          1,332       1,218       1,085
       Merchandise Inventories                  10,756      10,759      10,625
       Other Current Assets                      1,218       1,385       1,224
          Total Current Assets                  15,857      15,757      13,479
                                                ------      ------      ------

       Property and Equipment, net              24,798      25,190      25,060
       Goodwill                                  1,177       1,187       1,187
       Other Assets                                445         401         399
          TOTAL ASSETS                         $42,277     $42,535     $40,125
                                               =======     =======     =======

     LIABILITIES AND STOCKHOLDERS' EQUITY
       Accounts Payable                         $5,890      $5,919      $4,717
       Accrued Salaries and Related Expenses     1,262       1,226       1,290
       Current Installments of Long-Term
        Debt                                        44       2,022       1,042
       Other Current Liabilities                 3,751       3,572       3,073
          Total Current Liabilities             10,947      12,739      10,122
                                                ------      ------      ------

       Long-Term Debt                           10,731       7,727       8,707
       Other Long-Term Liabilities               2,366       2,624       2,407
          Total Liabilities                     24,044      23,090      21,236
                                                ------      ------      ------

       Total Stockholders' Equity               18,233      19,445      18,889
          TOTAL LIABILITIES AND STOCKHOLDERS'
           EQUITY                              $42,277     $42,535     $40,125
                                               =======     =======     =======

                   THE HOME DEPOT, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE SIX MONTHS ENDED JULY 31, 2011 AND AUGUST 1, 2010
                                 (Unaudited)
                            (Amounts in Millions)
                                                          Six Months
                                                             Ended
                                                      7-31-11      8-1-10
                                                      -------      ------
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Earnings                                       $2,175       $1,917
    Reconciliation of Net Earnings to Net Cash
     Provided by Operating Activities:
         Depreciation and Amortization                    849          866
         Stock-Based Compensation Expense                 108          112
         Changes in Working Capital and Other           1,355          468
         Net Cash Provided by Operating Activities      4,487        3,363
                                                        -----        -----

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Capital Expenditures                                 (469)        (407)
    Other                                                  27           44
         Net Cash Used in Investing Activities           (442)        (363)
                                                         ----         ----

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Long-Term Borrowings, net of
     discount                                           1,994            -
    Repayments of Long-Term Debt                       (1,014)         (17)
    Repurchases of Common Stock                        (2,251)      (1,209)
    Cash Dividends Paid to Stockholders                  (798)        (793)
    Other                                                  29          (11)
        Net Cash Used in Financing Activities          (2,040)      (2,030)
                                                       ------       ------

    Change in Cash and Cash Equivalents                 2,005          970

    Effect of Exchange Rate Changes on Cash and
     Cash Equivalents                                       1            4
    Cash and Cash Equivalents at the Beginning of
     the Period                                           545        1,421
                                                          ---        -----

    Cash and Cash Equivalents at the End of the
     Period                                            $2,551       $2,395
                                                       ======       ======

SOURCE The Home Depot


Source: newswire