The Home Depot today credited hurricanes and storms with helping some of its markets and product groups post better results than they might have otherwise, but said overall same-store sales declined by single-digit percentages in 2008 and big-ticket purchases recorded double-digit declines.
The home improvement retailer revealed those details to analysts while announcing it posted a net loss of $54 million in the fourth quarter of 2008, swinging from $671 million in earnings in the final quarter of 2007. The swing in part reflects the $163 million charge Home Depot took for writing down its investment in HD Supply and $387 million "rationalization charge" related to a number of recently closed operations, including its YardBIRDS units and EXPO Design Centers.
Looking ahead, "2009 is an even more uncertain planning horizon" than 2008 was, chairman and CEO Frank Blake said during the analysts' call. "We anticipate a tough year in 2009." Chief financial officer Carol Tome said same-store sales this year are likely to decline by "high single-digit" percentages, about the same as what happened in 2008.
Notably, Blank did not repeat the Home Depot's previously stated goal to "own the pro." In past analyst meetings, the company has noted that roughly 3% of its customers--professional builders and remodelers, presumably--accounted for 30% of its sales. This time, Blake stressed that the Home Depot has become a simpler company over the past two years by shedding units like HD Supply, EXPO Design and YardBIRDS.
In addition, Craig Menear, vice president for merchandising, noted the Home Depot saw softness in 2008 in "big ticket" sales, which it defines as spending more than $500 on one sales ticket. The number of those sales fell by double-digits, Menear said, while ticket sales of $20 or less fell just 2.7%. The average ticket declined 7.5% to $50.87.
Menear said sales in the building materials and plumbing sections outperformed many other parts of the store. But he then noted immediately after that some of the geographic regions that did better than others included the Gulf Coast region after last fall's hurricanes and central U.S. states ravaged by recent ice and snow storms.
Overall sales for the fourth quarter slid to $14.6 billion, down 17.3% from the fourth quarter of fiscal 2007. (But 4Q07 had 14 weeks to 2008's 13 weeks; exclude that extra week and sales declined 12%.) Counting only those stores open in both years, sales fell 13% with 2007's extra week and down 11.5% if one excludes that aberration.
Net earnings fell by nearly half in 2008 to $2.3 billion from $4.4 billion, on a 7.8% drop in sales (down 6.5% excluding the extra week) to $71.3 billion. Same-store sales for the year dropped 8.7%.
Roughly 28% of all sales--slightly less than in 2007--were made using credit provided by the Home Depot, Tome said. The Home Depot opened 3.2 million new accounts in 2008 with an average credit line of $6,850, she said.