The Home Depot last week reported a fiscal 2008 fourth-quarter consolidated net loss of $54 million, or a loss of $0.03 per diluted share, compared with net earnings of $671 million, or $0.40 per diluted share, in the same period in fiscal 2007. These results reflect a pre-tax business rationalization charge of $387 million, a pre-tax write-down of the company's investment in HD Supply of $163 million, as well as a loss from discontinued operations of $52 million, net of tax.
The business rationalization charge refers to the action the company took in the fourth quarter to exit its Expo, THD Design Center, YardBIRDS and HD Bath businesses and reduce support staff functions.
Earnings per diluted share from continuing operations in the fourth quarter of fiscal 2008 were $0.00, compared to net earnings per diluted share of $0.40 in the fourth quarter of fiscal 2007. Excluding the business rationalization charge and the write-down of the company's investment in HD Supply, earnings per diluted share from continuing operations were $0.19 for the fourth quarter, a decrease of 52.5 percent compared to fourth quarter 2007.
Sales for the fourth quarter totaled $14.6 billion, a 17.3-percent decrease from the fourth quarter of fiscal 2007. The fourth quarter of 2008 consisted of 13 weeks compared with 14 weeks of sales in the fourth quarter of fiscal 2007. Excluding the additional week in 2007, sales declined by 12.0 percent from the fourth quarter of fiscal 2007. Comparable store sales for the fourth quarter were negative 13.0 percent and were negatively impacted by the calendar shift in 2008. Excluding the calendar shift, comparable store sales were negative 11.5 percent. Like-for-like comparable store sales for U.S. stores were negative 9.2 percent.
For fiscal 2008, consolidated earnings per diluted share decreased 43.5 percent to $1.34 on consolidated net earnings of $2.3 billion, compared to consolidated earnings per diluted share of $2.37 on consolidated net earnings of $4.4 billion in fiscal 2007. Fiscal 2008 results reflect a $1.1 billion charge related to both the recently announced business rationalization charge of $387 million and the write-down of the company's investment in HD Supply of $163 million in the fourth quarter, as well as a $564 million store rationalization charge related to the closing of 15 stores and the removal of 50 stores from the company's new store pipeline taken earlier in the year. Fiscal 2008 results also include a loss from discontinued operations of $52 million, net of tax, or $0.03 per diluted share.
Earnings per diluted share from continuing operations in fiscal 2008 were $1.37, compared to $2.27 per diluted share from continuing operations in fiscal 2007, a decline of 39.6 percent.
Sales for fiscal 2008 were $71.3 billion, 7.8-percent below fiscal 2007. Excluding last year's extra week, sales declined by 6.5 percent. Comparable store sales for the year declined 8.7 percent and were not meaningfully impacted by the calendar shift.
"Despite the difficult economic conditions, the company made important progress in key areas," said Frank Blake, chairman and CEO. "We improved customer service ratings, as measured by customer surveys and third parties. We maintained sound inventory control, reducing inventory by over $1 billion while achieving the best in-stock rate we have had for several years. We launched an effective new lower price campaign. And we made strategic business decisions, exiting non-core businesses and significantly reducing square footage growth, which will better position us for the future.
"We expect the home improvement market in 2009 will remain just as challenging as 2008, but we will continue to invest in our associates and stores to set a strong foundation for the long-term health of our company," said Blake.
For 2009, the company expects a total sales decline of about 9 percent and an EPS decline from continuing operations of about 7 percent. The company said it plans to open 12 new stores in 2009.
The company also announced last week that its board of directors declared a fourth-quarter cash dividend of 22.5 cents per share. The dividend is payable on March 26, to shareholders of record on the close of business on March 12. This is the 88th consecutive quarter the company has paid a cash dividend.
At the end of the fourth quarter, The Home Depot operated a total of 2,274 retail stores, which included 1,971 The Home Depot stores in the United States, 176 stores in Canada, 74 stores in Mexico, 12 stores in China, as well as two THD Design Centers, five YardBIRDS stores and 34 Expo Design Center locations.
The Home Depot is headquartered in Atlanta. Its Home Depot Rentals business is No. 5 on the RER 100.