Lowe's, Home Depot Post Lower Q4 Profits
By Steve Smith -- TWICE, 3/10/2008
NEW YORK — Home improvement giants Lowe's and The Home Depot took it on the chin during their respective fiscal fourth quarters due to the housing crisis.
Lowe's reported a double-digit drop in earnings and flat sales for its fiscal fourth quarter. Net earnings were $408 million for the quarter ending Feb. 1, a 33.4 percent decline over the same period a year ago. For the fiscal year, ended the same date, net earnings declined 9.5 percent to $2.81 billion.
Sales for the quarter declined 0.3 percent to just under $10.4 billion. For the fiscal year, sales increased 2.9 percent to $48.3 billion. Comp-store sales declined 7.6 percent for the fourth quarter and 5.1 percent for fiscal 2007.
"Fourth-quarter and fiscal year 2007 sales fell short of our plan as we faced an unprecedented decline in housing turnover, falling home prices in many areas and turbulent mortgage markets that impacted both sentiment related to home-improvement purchases as well as consumers' access to capital," explained Robert Niblock, Lowe's chairman and CEO.
Niblock continued "We remain focused on what we can control — providing great customer service while managing expenses and offering customers the best shopping experience in home improvement." He added that the Federal Reserve rate cuts and the stimulus packaged passed by Congress should improve consumer confidence later in the year.
Home Depot reported lower net earnings but slightly higher sales in its fiscal fourth quarter, which ended Feb. 3, 2008.
Consolidated net earnings for the quarter were $671 million compared with $925 million in the same period in fiscal 2006. Sales for the fourth quarter totaled $17.7 billion, a 1.5 percent increase from the fourth quarter of fiscal 2006.
The fourth quarter of 2007 consisted of 14 weeks compared with 13 weeks for the prior year. The 14th week added approximately $1.1 billion in sales for the quarter and the year. Excluding the 14th week, fourth-quarter sales declined by 4.7 percent compared with the fourth quarter of 2006.
Comp-store sales for the quarter declined 8.3 percent. The additional week had no impact on comparable sales performance for the quarter or the year.
In its 2008 financial outlook, Home Depot is predicting a total sales decline of 4 percent to 5 percent, with negative comps in the mid- to high-single-digit range, flat to slightly positive gross margin expansion and 55 new store openings with five store relocations.
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