The Home Depot Announces Third Quarter Results

ATLANTA, Nov. 18 /PRNewswire-FirstCall/ -- The Home Depot(R), the world's largest home improvement retailer, today reported fiscal 2008 third quarter consolidated net earnings of $756 million, or $0.45 per diluted share, compared with $1.1 billion, or $0.60 per diluted share, in the same period in fiscal 2007. Earnings per diluted share from continuing operations in the third quarter of fiscal 2008 were $0.45, compared to $0.59 per diluted share in the third quarter of fiscal 2007.

Sales for the third quarter totaled $17.8 billion, a 6.2 percent decrease from the third quarter of fiscal 2007, reflecting negative comparable store sales of 8.3 percent, offset in part by sales from new stores.

The Company had 53 weeks in fiscal 2007, which shifted the 2008 fiscal calendar. Because of this shift and given the seasonal nature of its business, third quarter sales, on a like for like calendar basis, were negatively impacted by approximately $225 million. Excluding the calendar shift, the Company's like for like comp for the quarter was negative 7.1 percent.

"The housing and home improvement markets remain challenging. Across our entire business, we are making the adjustments necessary to respond to a tough market environment," said Frank Blake, chairman & CEO.

"We are focused on the things we can control with a commitment to provide value and service to our customers," said Blake. "I am proud of what our associates have accomplished in a very difficult sales environment."

Fiscal Year 2008 Financial Outlook

Given the continued softness in the housing and home improvement markets as well as negative macro economic conditions, the Company now believes that fiscal 2008 sales could be down as much as 8 percent for the year. The Company expects that earnings per share from continuing operations will decline by approximately 24 percent, consistent with previous guidance.

The Company's 2008 earnings per share guidance does not include its store rationalization charge from the closing of 15 stores and removal of 50 stores from its future growth pipeline.

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 homedepot.com in the Investor Relations section.

At the end of the third quarter, the Company operated a total of 2,268 retail stores, which included 1,970 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), 172 stores in Canada, 73 stores in Mexico, 12 stores in China, as well as 2 THD Design Centers, 5 Yardbirds stores and 34 EXPO Design Center locations. 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. HDE

Certain statements contained herein, including any statements related to the state of the home improvement market, the state of the construction and housing markets, our reinvestment plans, comparable store sales, store openings and closures, implementation of store initiatives and financial outlook, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. While these statements are based on currently available information and current expectations and projections about future events, such forward-looking statements may prove to be incorrect. Risks and uncertainties include but are not limited to: economic conditions in North America and in other countries where we operate; changes in our cost structure; our ability to attract, train and retain highly qualified associates; conditions affecting customer transactions and average ticket, including, but not limited to, improving and streamlining operations, customers' in-store experience, and risks associated with our distribution strategies and planned RDC roll-out. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. Additional information regarding these and other risks and uncertainties is contained in our periodic filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended February 3, 2008. The risks and uncertainties described in our Form 10-K include the considerable risks associated with the current economic environment and the possible adverse effects on our results of operations and financial condition.

                    THE HOME DEPOT, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF EARNINGS
 FOR THE THREE MONTHS AND NINE MONTHS ENDED NOVEMBER 2, 2008 AND OCTOBER 28,

                                     2007
                                 (Unaudited)
      (Amounts in Millions Except Per Share Data and as Otherwise Noted)

                      Three Months Ended    %      Nine Months Ended    %
                                         Increase                    Increase
                       11-2-08 10-28-07 (Decrease) 11-2-08 10-28-07 (Decrease)

    NET SALES          $17,784  $18,961     (6.2)% $56,681  $59,690     (5.0)%
    Cost of Sales       11,790   12,622     (6.6)   37,651   39,747     (5.3)
      GROSS PROFIT       5,994    6,339     (5.4)   19,030   19,943     (4.6)

    Operating Expenses:
      Selling, General
       and
       Administrative    4,225    4,144      2.0    13,595   12,700      7.0
      Depreciation
       and Amortization    446      431      3.5     1,342    1,250      7.4
        Total Operating
         Expenses        4,671    4,575      2.1    14,937   13,950      7.1

    OPERATING INCOME     1,323    1,764    (25.0)    4,093    5,993    (31.7)

    Interest (Income)
     Expense:
      Interest and
       Investment Income    (6)     (29)   (79.3)      (13)     (67)   (80.6)
      Interest Expense     157      154      1.9       485      497     (2.4)
        Interest, net      151      125     20.8       472      430      9.8

    EARNINGS FROM
     CONTINUING
     OPERATIONS BEFORE
     PROVISION FOR
     INCOME TAXES        1,172    1,639    (28.5)    3,621    5,563    (34.9)

    Provision for Income
     Taxes                 416      568    (26.8)    1,307    2,024    (35.4)

    EARNINGS FROM
     CONTINUING
     OPERATIONS            756    1,071    (29.4)    2,314    3,539    (34.6)

    EARNINGS FROM
     DISCONTINUED
     OPERATIONS,
     NET OF TAX              -       20   (100.0)        -      185   (100.0)

      NET EARNINGS        $756   $1,091    (30.7)%  $2,314   $3,724    (37.9)%


    Weighted Average
     Common Shares       1,681    1,810     (7.1)%   1,681    1,910    (12.0)%

    BASIC EARNINGS PER
     SHARE FROM
     CONTINUING
     OPERATIONS          $0.45    $0.59    (23.7)    $1.38    $1.85    (25.4)
    BASIC EARNINGS PER
     SHARE FROM
     DISCONTINUED
     OPERATIONS             $-    $0.01   (100.0)       $-    $0.10   (100.0)
    BASIC EARNINGS PER
     SHARE               $0.45    $0.60    (25.0)    $1.38    $1.95    (29.2)

    Diluted Weighted
     Average Common
     Shares              1,687    1,815     (7.1)%   1,686    1,918    (12.1)%

    DILUTED EARNINGS
     PER SHARE FROM
     CONTINUING
     OPERATIONS          $0.45    $0.59    (23.7)    $1.37    $1.85    (25.9)
    DILUTED EARNINGS
     PER SHARE FROM
     DISCONTINUED
     OPERATIONS             $-    $0.01   (100.0)       $-    $0.10   (100.0)
    DILUTED EARNINGS
     PER SHARE           $0.45    $0.60    (25.0)    $1.37    $1.94    (29.4)


    Note: The sum of Diluted Earnings per Share from Continuing Operations and
          Diluted Earnings per Share from Discontinued Operations may not
          total Diluted Earnings per Share due to rounding.


    SELECTED HIGHLIGHTS (1)

                      Three Months Ended    %      Nine Months Ended    %
                                         Increase                    Increase
                       11-2-08 10-28-07 (Decrease) 11-2-08 10-28-07 (Decrease)

    Number of Customer
     Transactions          315      326     (3.4)%     989    1,021     (3.1)%
    Average Ticket      $55.86   $57.48     (2.8)   $56.97   $58.26     (2.2)
    Weighted Average
     Weekly Sales per
     Operating Store
     (in thousands)       $597     $651     (8.3)     $640     $696     (8.0)
    Square Footage at
     End of Period         238      233      2.1       238      233      2.1
    Capital Expenditures  $451     $913    (50.6)   $1,411   $2,348    (39.9)
    Depreciation and
     Amortization (2)     $476     $461      3.3%   $1,432   $1,342      6.7%


    (1) Includes continuing operations only.
    (2) 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 NOVEMBER 2, 2008, OCTOBER 28, 2007 AND FEBRUARY 3, 2008
                            (Amounts in Millions)

                                               11-2-08    10-28-07     2-3-08
                                            (Unaudited) (Unaudited)  (Audited)

    ASSETS
      Cash and Short-Term Investments             $874        $550       $457
      Receivables, net                           1,490       1,609      1,259
      Merchandise Inventories                   11,869      12,588     11,731
      Other Current Assets                       1,374       1,378      1,227
        Total Current Assets                    15,607      16,125     14,674

      Property and Equipment, net               26,782      27,245     27,476
      Goodwill                                   1,175       1,199      1,209
      Other Assets                                 598         937        965
        TOTAL ASSETS                           $44,162     $45,506    $44,324

    LIABILITIES AND STOCKHOLDERS' EQUITY
      Short-Term Debt                               $-        $748     $1,747
      Accounts Payable                           6,773       7,569      5,732
      Accrued Salaries and Related Expenses      1,044       1,175      1,094
      Current Installments of Long-Term Debt     1,016         299        300
      Other Current Liabilities                  4,048       4,548      3,833
        Total Current Liabilities               12,881      14,339     12,706

      Long-Term Debt                            10,353      11,342     11,383
      Other Long-Term Liabilities                2,532       2,379      2,521
        Total Liabilities                       25,766      28,060     26,610

      Total Stockholders' Equity                18,396      17,446     17,714
        TOTAL LIABILITIES AND STOCKHOLDERS'
         EQUITY                                $44,162     $45,506    $44,324

SOURCE The Home Depot