Home Depot Issues Warnings

ATLANTA (AP) — Stifled by weak prices and a slowing economy, The Home Depot Inc. warned Friday that its fourth-quarter earnings will fall short of expectations on flat sales. <br><br>The world&#39;s

Friday, January 19th 2001, 12:00 am

By: News On 6


ATLANTA (AP) — Stifled by weak prices and a slowing economy, The Home Depot Inc. warned Friday that its fourth-quarter earnings will fall short of expectations on flat sales.

The world's largest home-improvement retailer said it expects to earn 20 cents per share for the three months ending Jan. 28, 4 cents lower than the consensus of analysts surveyed by First Call/Thomson Financial. Home Depot earned 25 cents per share in the same period a year ago.

The company said the revision was caused by ``a declining economy'' and continued price weakness in lumber, building materials and related products.

For the year, Home Depot expects to earn $1.10 per share, short of analysts' forecast of $1.14.

Shares of Home Depot, which is one of the 30 companies in the Dow Jones industrial average, fell $2.13 to $42.13 a share in afternoon trading on the New York Stock Exchange.

``We're clearly facing a harsh and rapidly downward-spiraling economic environment,'' Bob Nardelli, Home Depot's new president and chief executive, told analysts in a conference call.

Sales have been crimped by cold weather, rising energy costs, growing consumer debt, investment losses and higher interest rates, he said. Lower stock prices have eliminated $3.7 trillion from equities markets in recent months, causing many people to curb their spending, he said.

``All of these things are certainly causing the consumer to think hard and make a much more informed decision on how they'll spend their dollars,'' Nardelli said.

The company also expects those factors to curtail its performance into the first half of this year, he said. But ``we will manage through this current environment.''

Nardelli said the company's four-day, 10 percent discount on all items last month helped it move $100 million worth of merchandise from stores. He declined to offer specifics about how much the discount affected profits, pending the company's Feb. 20 earnings report.

Because the economic downturn is so widespread, Home Depot won't be able to do much to improve the situation, said Donald Trotter, an analyst with Jefferies and Co.

``A lot of it is you just have to ride through it,'' Trotter said. ``While it's a great company — a really great company — in terms of the growth dynamics, in our judgment, they have hit their peak.''

It was the second consecutive quarterly warning by Home Depot. In October, the company warned that third-quarter earnings would fall three cents below expectations. The earnings report, released in November, matched that prediction.

Home Depot has 1,123 stores in the United States, Canada and South America.

———

On the Net: http://www.homedepot.com
logo

Get The Daily Update!

Be among the first to get breaking news, weather, and general news updates from News on 6 delivered right to your inbox!

More Like This

January 19th, 2001

September 29th, 2024

September 17th, 2024

July 4th, 2024

Top Headlines

December 14th, 2024

December 14th, 2024

December 14th, 2024

December 14th, 2024