Don’t expect the MSM to look under the hood of Home Depot. They will just regurgitate whatever the Home Depot PR department tells them and the usual Wall Street bullshit about beating expectations. First of all, Home Depot is no JC Penney. They are a well run strong company. They were smart enough to realize back in 2008 that it was time to stop building new stores and cannibalizing themselves to death.
The MSM will tout their 20% earnings growth as proof the consumer is back. One look at some of their financial statistics and you will realize that storyline is bullshit. Here are my observations:
- Home Depot sales are still lower than they were in 2007.
- Home Depot is closing more stores than they are opening. That always happens when consumers are buying. Right?
- There were 14 weeks this year versus last year, so their comparable increase in profits is really only up 11% on comparable store sale increases of 4.3%.
- The info below their P&L tells the true story. Their entire increase in sales is attributable to inflation of 5% in their prices. The average ticket is a reflection of price increases. Bernanke and the BLS keep telling you inflation is less than 2%, but your wallet tells you otherwise. Home Depot is also telling you otherwise.
- The total number of transactions was up 2.5% over last year reflecting total customer counts. One problem, the extra week increased that figure by 24 million transactions. Therefore, on a comparable basis their traffic FELL by 4.6%. So much for the robust consumer storyline.
Home Depot is a well run retailer that is closing stores and is seeing a decline in customer traffic. Does that match the housing recovery storyline? I’m sure CNBC and the Wall Street Journal will be all over this story today.
The Home Depot Announces First Quarter Results; Raises Fiscal Year 2013 Guidance
Net earnings for the first quarter were $1.2 billion, or $0.83 per diluted share, compared with net earnings of $1.0 billion, or $0.68 per diluted share, in the same period of fiscal 2012. For the first quarter of fiscal 2013, diluted earnings per share increased 22.1 percent from the same period in the prior year.
“In the first quarter, we saw less favorable weather compared to last year, but we continue to see benefit from a recovering housing market that drove a stronger-than-expected start to the year for our business,” said Frank Blake, chairman & CEO. “I would like to thank our associates for their hard work and commitment to our customers.”
Updated Fiscal 2013 Guidance
Based on its year-to-date performance and outlook for the balance of the year, the Company raised its fiscal 2013 sales guidance and now expects sales to be up approximately 2.8 percent with comparable store sales up approximately 4.0 percent for the year. The Company raised its fiscal 2013 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 17 percent to $3.52 for the year. The Company’s fiscal 2013 sales and earnings-per-share guidance is based on a 52-week year compared to fiscal 2012, a 53-week year.
The Company’s earnings-per-share guidance includes the benefit of its year-to-date share repurchases and intent to repurchase $4.4 billion in additional shares over the remainder of the year, which will bring the total dollar amount of shares repurchased to $6.5 billion for the year.
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 first quarter, the Company operated a total of 2,257 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs more than 300,000 associates. The Home Depot’s stock is traded on the New York Stock Exchange /quotes/zigman/229488/quotes/nls/hd HD -0.13% and is included in the Dow Jones industrial average and Standard & Poor’s 500 index.
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MAY 5, 2013 AND APRIL 29, 2012
(Amounts in Millions Except Per Share Data and as Otherwise Noted)
Three Months Ended
May 5, April 29, % Increase
2013 2012 (Decrease)
NET SALES $ 19,124 $ 17,808 7.4%
Cost of Sales 12,445 11,625 7.1
GROSS PROFIT 6,679 6,183 8.0
Selling, General and Administrative 4,183 4,086 2.4
Depreciation and Amortization 402 383 5.0
Total Operating Expenses 4,585 4,469 2.6
OPERATING INCOME 2,094 1,714 22.2
Interest and Other (Income) Expense:
Interest and Investment Income (3) (5) (40.0)
Interest Expense 164 156 5.1
Other – (67) (100.0)
Interest and Other, net 161 84 91.7
EARNINGS BEFORE PROVISION FOR INCOME TAXES 1,933 1,630 18.6
Provision for Income Taxes 707 595 18.8
NET EARNINGS $ 1,226 $ 1,035 18.5%
Weighted Average Common Shares 1,468 1,522 (3.5)%
BASIC EARNINGS PER SHARE $ 0.84 $ 0.68 23.5
Diluted Weighted Average Common Shares 1,478 1,531 (3.5)%
DILUTED EARNINGS PER SHARE $ 0.83 $ 0.68 22.1
Three Months Ended
SELECTED HIGHLIGHTS May 5, April 29, % Increase
2013 2012 (Decrease)
Number of Customer Transactions 337.1 328.9 2.5%
Average Ticket (actual) $ 57.24 $ 54.51 5.0
Weighted Average Weekly Sales per Operating Store (in thousands) $ 658 $ 612 7.5
Square Footage at End of Period 235 236 (0.4)
Capital Expenditures $ 278 $ 228 21.9
Depreciation and Amortization (1) $ 435 $ 410 6.1%