The world's largest home improvement retailer Home Depot Inc. (HD) will publish its third-quarter results before the market opens Tuesday, with analysts projecting earnings of $0.36 per share, on revenues of $16.27 billion. In the year-earlier quarter, the company reported earnings of $0.45 per share and sales of $17.8 billion.
The company's third-quarter results are likely to reflect pressures from the economic downturn and a decrepit home market that burked sales and profit growth across the industry. Though, retail sales in the U.S. for October rose 1.4% sequentially, sales at building material and garden equipment and supplies stores declined 2.4%, and furniture & home furnishings stores sales fell 0.8% on a sequential basis, the Commerce Department reported.
While reporting second-quarter numbers, Home Depot boosted its fiscal 2009 outlook for earnings per share from continuing operations to a range of flat to up 7% from last year, from its earlier guidance of flat to down 7% from last year. Adjusted earnings per share from continuing operations for 2009 are now projected to decline by 15% - 20%, compared to its previously issued forecast of 20% - 26% decline. Home Depot also confirmed that it believes fiscal 2009 sales to be down about 9% from the prior year.
In the preceding second quarter, the company posted a decline in profit, totaling $1.116 billion or $0.66 per share, compared to $1.202 billion or $0.71 per share in the prior-year period, as net sales and comparable store sales were hurt by pressure on consumers due to market turmoil. Net sales for the quarter dropped 9.1% to $19.07 billion from $20.99 billion a year ago.
Reflecting the weak consumer spending amid the broad-based pressures of the macro environment, Home Depot's rival Lowe's Companies Inc. (LOW) witnessed a 30% downturn in its third-quarter profit that totaled $344 million or $0.23 per share, compared to $488 million or $0.33 per share in the year-ago period. Quarterly net sales declined 3.0% to $11.4 billion from the previous year's net sales of $11.7 billion, with comparable store sales declining 7.5%.
Lowe's projects fourth-quarter earnings between $0.09 and $0.13 per share, with total sales expected to be essentially flat to last year. Comparable store sales for the quarter is anticipated to drop 2% - 6%. The company expects to open about 13 new stores reflecting square footage growth of about 4%.
For fiscal year ending January, 2010, Lowe's revised its earnings forecast to $1.16 - $1.20 per share, from its prior outlook of $1.13 - $1.21 per share. Total sales are now expected to decline 2% - 3%, with comparable store sales decreasing 7% - 8%. Earlier, the company had projected about 3% decrease in sales from the prior year, and 7% - 9% drop in comparable store sales.
Another peer, Lumber Liquidators Inc. (LL) posted third-quarter net income of $7.76 million or $0.28 per share, an increase from $5.46 million or $0.20 per share reported a year ago, reflecting improved gross margins and a 14.2% rise in sales. Quarterly sales increased to $140.52 million from $123.06 million in the previous year.
Home Depot shares, which have been trading between $17.46 and $28.44 in the past 52 weeks, closed Monday's trading session at $27.65, up 31 cents or 1.13%, on a volume of 18.7 million shares.
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