|The Home Depot Announces Record Third Quarter 2005 Results|
Tuesday November 15, 6:00 am ET
Lifts fiscal 2005 sales and earnings per share growth guidance
Fiscal 2005 sales growth guidance 10-12 percent, earnings per share growth guidance 17-18 percent
- Record Third Quarter Sales of $20.7 billion
- Record Third Quarter Operating Margin of 11.9 percent
- Record Third Quarter Net Earnings of $1.5 billion
- Record Average Ticket of $58.92
ATLANTA, Nov. 15 /PRNewswire-FirstCall/ -- The Home Depot®, the world's largest home improvement retailer, today reported third quarter fiscal 2005 net earnings of $1.5 billion, $0.72 per diluted share, up 20 percent, compared with $1.3 billion, $0.60 per diluted share, for the third quarter of fiscal 2004.
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Sales for the period increased $2.0 billion, or 10.5 percent, to $20.7 billion. Growth in comparable store sales was 3.6 percent.
"The execution of our strategy and the focus on our fundamentals has enabled us to consistently and predictably deliver strong results," said Bob Nardelli, chairman, president & CEO. "We have stayed on strategy, effectively managed our business and produced solid earnings growth through the hard work and dedication of our 325,000 associates."
"We continued to drive productivity throughout our business, and are well on our way to becoming the low cost provider in our industry. During the quarter we continued to use our strong financial condition to invest in the business and return cash to our shareholders," said Carol Tome, executive vice president and CFO. At the end of the third quarter, the company reported total assets of $44.7 billion, total stockholders' equity of $25.8 billion and return on invested capital of 21.8 percent. In the third quarter, the company repurchased $868 million or 21.8 million shares under its share repurchase program. Since the inception of its share repurchase program, the company has repurchased $9.5 billion or 272 million shares under its $11 billion authorization. The company has repurchased about 12 percent of its outstanding shares since 2002.
The company lifted its fiscal 2005 sales growth guidance from 9-12 percent to 10-12 percent and increased its earnings per share growth guidance from 14- 17 percent to 17-18 percent.
Enhancing the Core
By broadening its assortment and adding new, innovative and distinctive merchandise that provides tremendous customer value, The Home Depot achieved a record average ticket of $58.92, representing an increase of 6.1 percent compared to the third quarter of last year.
Merchandising highlights during the third quarter included:
- Introduction of new and exclusive Makita and Milwaukee lithium-ion
power tools, which offer more power, less weight, and longer run times
for pros and serious do-it-yourselfers
- Introduction of Ryobi MultiTASKit Laser level, offering a magnetic
plate, light and laser tool
- Launch of Colores Origenes, a vibrant color palette featuring over 70
colors designed in response to customer trends
- Continued growth in core appliance market share, increasing share by
130 basis points to 9.2 percent on a rolling 12-month basis, according
to an independent third party research company, the highest yearly
market share gain in the industry
"During the quarter our merchants did a great job of adding innovative and distinctive products to our stores. Our strategy of enhancing the core through distinction and innovation is working as evidenced by the highest average ticket in our company's history. We saw average ticket growth across the store with real strength in kitchen and bath," said Tom Taylor, executive vice president, Merchandising and Marketing.
"The active hurricane season during the quarter showcased our merchandising and operational flexibility. We took extraordinary steps to take care of our communities, customers and associates and we were the first retailer to deliver emergency-type merchandise to the affected areas. By the end of the quarter, we directed over 4,000 truckloads of merchandise to the Gulf Coast and Florida regions," added Taylor.
The company continued to invest in its stores through technology initiatives focused on increasing operational efficiency and improving the customer shopping experience. During the third quarter, the company achieved the following accomplishments:
- Completed the rollout of back-end scanned receiving to all US and
- Commenced vendor authorization for certified receiving
- Grew centralized auto replenishment to 11 percent of store sales
- Implemented a special order flooring services pilot in 146 stores
- Continued installation of self-checkout registers, now in 1,205 stores
- Implemented new core financial systems in Mexico
"We are already seeing the benefits from these initiatives as they are driving improvement in our operational efficiency. Further, technology enables us to improve our customers' shopping experience as we redeploy tasking hours to the sales floor, drive better in-stock positions, improve the accuracy for special orders and provide speed in the checkout process," said Carl Liebert, executive vice president, Home Depot Stores.
Extending the Business
During the quarter, the company opened 37 new stores across Canada, Mexico and the United States, bringing the total store count to 1,972 as of the end of the quarter. In the fourth quarter, the company will open its 2,000th store, including its 50th store in Mexico, which opened last week. The Home Depot is the number one home improvement retailer in the United States, Canada and Mexico.
The company's services business grew 21 percent to $1.2 billion during the third quarter. The Home Depot saw strong growth in installation categories such as HVAC, kitchens, countertops, windows and roofing/gutters.
Expanding the Market
During the third quarter, The Home Depot Supply reported strong double- digit sales growth through organic and inorganic expansion. The Home Depot Supply operates on three platforms: Maintenance, Repair and Operations (MRO), Builder and Professional Supply. In August, White Cap, a leading professional distribution business, expanded its presence in California and Hawaii through the acquisition of West Tool, Inc. and Wire Products of Hawaii, Inc., respectively. At the end of the third quarter, White Cap had 94 branches in 23 states, compared to 70 branches in 17 states when it was acquired by the company. Additionally, in August the company closed on its acquisition of National Waterworks, adding to its MRO platform.
National Waterworks is the market leader in water and wastewater transmission products. In October, National Waterworks expanded its presence in Central Florida through the acquisition of Magnum Pipe, LLC.
An updated schedule containing more detailed information about The Home Depot Supply can be found on www.homedepot.com under the Investor Relations section.
Other Notable Items
The Home Depot is committed to giving back to the communities it serves. The company demonstrated that commitment by leading a Corporate Month of Service in 2005. Along with The Home Depot, 28 companies and organizations have committed to increase the number of volunteers across America by 6.4 million or 10 percent by the end of 2006.
In addition to volunteerism, the company, The Home Depot Foundation, The Homer Fund, vendor partners and customers committed over $9.3 million in cash and materials to relief and rebuilding efforts as a result of the devastating hurricanes.
- $7.2 million to various organizations to support rebuilding and relief
efforts including the American Red Cross, Salvation Army, Volunteer
Florida Foundation, United Way and Hands on Network
- $2.1 million to associates through The Homer Fund, an organization that
provides emergency assistance to The Home Depot associates
These third quarter contributions were in addition to the $6.6 million committed earlier to the American Red Cross, through a three-year partnership, to support their hurricane relief and disaster education efforts.
During the quarter, the company received the Award for Excellence for Workplace Volunteer Programs from the Points of Light Foundation.
The Home Depot will conduct a conference call today at 9:00 a.m. EST 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 www.homedepot.com under the Investor Relations section.
During the third quarter of 2005, The Home Depot opened 37 new stores and closed 20 EXPO stores. At the end of the third quarter, the company operated a total of 1,972 stores, which included 1,913 The Home Depot stores with 1,738 stores in the United States, 126 stores in Canada, and 49 stores in Mexico. The company also operates 34 EXPO Design Centers, 11 The Home Depot Landscape Supply stores, two The Home Depot Floor Stores, five The Home Depot Supply stores and seven Contractors' Warehouse stores. The company employs over 325,000 associates.