CHICAGO–The Home Depot Inc.'s third-quarter profit fell 31 per cent, less than analysts estimated, after it slashed corporate expenses and closed stores.
The worlds largest home-improvement retailer, which repeated its annual earnings forecast even as it lowered the projection for sales, is cutting costs as U.S. consumer spending slows. Net income for the three months that ended Nov. 2 decreased 31 per cent to $756 million (U.S.), or 45 cents a share, from $1.09 billion, or 60 cents, a year earlier, Atlanta-based Home Depot said yesterday. Twenty-four analysts surveyed estimated an average of 38 cents a share. Sales retreated 6.2 per cent to $17.8 billion, beating the $17.6 billion average estimate.
"This company continues to perform well in a challenging environment," said Stephanie Hoff, senior retail analyst with Edward Jones.
Sales for the year that ends Feb. 1 may decline more than the 5 per cent Home Depot had forecast, the company said. The retailer reaffirmed its projection that earnings per share will drop 24 per cent, adding that the guidance does not include a charge from closing 15 stores and removing 50 stores from its growth plans.
Sales in stores open at least a year dropped 8.3 per cent. Sales in those stores are down about 10.5 per cent so far this month.
Home Depot tried to draw in customers by cutting prices between 5 per cent and 50 per cent on as many as 1,200 items. But that strategy may have only reduced the average value of customers' purchases.
The number of transactions in the quarter dropped 3 per cent and executives said shoppers are finding it harder to obtain credit.
From the Star's wire services
