Home Depot Sees 14% Growth

Home Depot Sees 14% Growth
By Jennifer D. Duell

GlobeSt.RETAIL

Last updated: February 22, 2006  07:47am

ATLANTA-The Home Depot posted record results for its fourth quarter and fiscal year 2005, driving the retailer to raise its 2006 guidance to 14% to 17% revenue growth and 10% to 14% earnings growth. The announcement was made by Home Depot's executive vice president and CFO Carol Tome during the retailer's earnings conference call.

The middle point in those ranges puts this year's total sales at $94.5 billion and earnings at $3.05 a share. Both results would beat Wall Street's projections, where analysts are currently expecting annual sales of $91 billion and earnings of $3.03 a share.

During the conference call, Home Depot chairman, president & CEO Bob Nardelli said that sales growth among Baby Boomers has significantly impacted the company as they seek do-it-yourself and do-it-for-me products and services. The retailer's average ticket grew to a record $57.98 for fiscal year 2005, an increase of 5.6% from the prior year. Top sellers were refrigerators, washing machines and kitchen cabinets

During the fourth quarter of fiscal 2005, the company reported record profits, earnings per share and sales, pushing Home Depot to another record year of performance, Nardelli said during the call. "This year was another year of company records," he noted.

Fourth-quarter diluted earnings per share rose 27.7% to a record 60 cents on net earnings of $1.3 billion, compared with 47 cents on net earnings of $1 billion for the same period in fiscal 2004. Sales for the fourth quarter fiscal 2005 totaled $19.5 billion, a 15.9% increase from the fourth quarter of fiscal 2004. Comparable store sales for the period increased 5.5%.

For fiscal 2005, diluted earnings per share increased 20.4% to $2.72 on net earnings of $5.8 billion, compared to diluted earnings per share of $2.26 on net earnings of $5 billion in fiscal 2004. According to Nardelli, 2005 was the fourth consecutive year of earnings growth in excess of 20%.

Sales for fiscal 2005 increased to $81.5 billion, an 11.5% increase over the previous year, and comparable store sales for the year grew 3.8%. During 2005, Home Depot expanded its product offerings, specifically in appliances. It introduced LG appliances and grew its appliance market share from 8.1% to 9.7%, according to an independent third-party research company.

Growing demand for do-it-for-me services pushed Home Depot's services business to post growth of 21.4% during fiscal 2005. Installation categories such as countertops, roofing/gutters, kitchens, windows and HVAC were strong, according to the retailer.

During 2005, the company opened 179 new stores, eclipsing its 2,000th store and its 54th store in Mexico. The retailer opened 20 net new stores in Canada and 10 net new stores in Mexico. As of year-end, approximately 9.4% of the company's store base was located outside of the US.

At the end of fiscal year 2005, Home Depot employed approximately 345,000 associates in 2,042 stores in all 50 states, the District of Columbia, Puerto Rico, 10 Canadian provinces and Mexico. The company also operates 34 EXPO Design Center locations, 11 THD Landscape Supply stores, eight Contractors' Warehouse stores, three THD Supply stores, and two THD Floor stores.

Copyright © 2006 Real Estate Media. 

http://globest.com/retail/news/1_379/southeast/18714-1.html