EXHIBIT 99.1
[HOME DEPOT LOGO]
THE HOME DEPOT REPORTS RECORD THIRD QUARTER RESULTS,
INCREASES FISCAL 2004 EPS GROWTH GUIDANCE TO 19-20 PERCENT
- Record EPS of $0.60, up 20%
- Record Sales of $18.8 billion, up 13%
- 4.5% Comparable Store Sales Growth
- 11% Operating Margin
- 21.4% Return on Invested Capital
ATLANTA, November 16, 2004 -- The Home Depot(R), the world's largest
home improvement retailer, today reported record third quarter fiscal 2004 net
earnings of $1.3 billion, or $0.60 per diluted share, up 20 percent compared to
$0.50 per diluted share for the third quarter fiscal 2003.
Sales for the period increased $2.2 billion, or 13.1 percent, to $18.8
billion. Comparable store sales rose 4.5 percent.
Based on the strong third quarter performance, the company announced
that it is raising its fiscal 2004 earnings per share growth guidance from
14-17 percent to 19-20 percent.
"The strength of our core retail business, coupled with our growing
services and professional supply businesses, is delivering solid returns," said
Bob Nardelli, chairman, president & CEO, The Home Depot. "Our business strategy
of enhancing the core, extending the business and expanding our markets is
clearly driving consistent, profitable sales growth. Additionally, in the face
of a record number of hurricanes in the Southeast, our stores remained open and
our associates and suppliers worked tirelessly to take care of our customers,
and I want to thank them."
The company ended the quarter with $39.6 billion in total assets,
including $3.4 billion in cash and stockholders' equity of $23.7 billion.
"Our solid financial results drove our return on invested capital to
21.4 percent, up 260 basis points from the third quarter last year," said Carol
Tome, executive vice president, CFO, The Home Depot. "Our financial condition
remains unparalleled in retail."
ENHANCING THE CORE
"Our results reflect our breadth of merchandise, the benefits of our
store modernization program and support from our marketing initiatives," said
John Costello, executive vice president of Merchandising and Marketing, The
Home Depot. "This is evidenced by a 6.6 percent increase in our average ticket,
which reached $55.53, a company record. We experienced average ticket growth
across the store because of an enriched merchandising mix of products."
Merchandising highlights in the quarter include:
- Continued product innovation across both hardlines and decor,
including Hampton Bay interior lighting and ceiling fans,
Ryobi air grip laser level, Charmglow outdoor fireplace
products, RIDGID titanium coated saw blades, Porter Cable
compressor combo, Masonite doors and Trex composite decking
- Record share in core appliances, up 40% over a year ago, and
the tenth consecutive quarterly gain, supported by the
rollout of GE Adora, the new Hotpoint Metallic Series and the
Americana line
- Continued store modernization, including the Ralph Lauren
Color Center, the new Exterior Wood Care Center and resets
across a variety of categories
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- Expanded multi-channel retailing through homedepot.com,
in-store special orders and catalogs
- The nation's largest Tool Rental Center network, opening the
1,000th location
EXTENDING THE BUSINESS
During the quarter, the company opened 38 new stores, including two
new urban format stores, one in New York City and one in Park Royal, West
Vancouver, British Columbia. "These stores demonstrate another opportunity for
new store growth by bringing The Home Depot to previously underserved customers
and markets," added Costello.
The company continued to extend its core business in the third
quarter, growing services revenues by 26% to $957 million for the quarter.
Services highlights include:
- Offered 23 national installation programs, with plans for
more
- Continued strength in services such as carpet, countertops,
kitchens and windows, with more than 11,000 installations
each day
EXPANDING MARKETS
The company said that its recently acquired White Cap business is
exceeding expectations, with strong sales, smooth integration and purchasing
synergies. White Cap provides a platform for future growth to large- and
mid-sized professional contractors, serving a $400 billion market. The company
said that since the acquisition, White Cap has made three small bolt-on
acquisitions and has grown organically by adding seven branches, bringing the
total to 77 in 17 states.
Canada and Mexico continue to represent significant growth
opportunities for The Home Depot. "Our Mexico business is strong, with
double-digit comp growth," said Nardelli. "The integration and re-branding of
the Home Mart stores have gone extremely well. Today, we have 10 stores in
Mexico City and 42 stores throughout the country. Housing is a clear priority
in Mexico, and based upon my recent trip there, I am confident that we are well
positioned in this $16 billion market."
In September, The Home Depot marked its inaugural Week of Service with
associate volunteers donating more than 260,000 hours, touching more than 1,200
communities and 1 million people throughout North America and China.
In cooperation with the Departments of Defense, Labor and Veterans
Affairs, the company launched Operation Career Front and has hired more than
10,000 veterans this year alone. "We were honored to have been recognized by
Employer Support Guard and Reservists and the Department of Defense with the
Freedom Award," said Nardelli. "And, just last week, we were ranked number one
as the most military-friendly employer by GI Jobs magazine."
The Home Depot will conduct a conference call today to discuss
information included in this news release and related matters at 9:00 a.m. EST.
The conference call will be available in its entirety through a Web cast at
http://www.homedepot.com, and through replay at that site under the investor
relations' section.
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The adjusted earnings per share included in this press release is
reconciled to the comparable generally accepted accounting principles amount in
the attached schedule. In January 2004, the company adopted EITF 02-16
"Accounting by a Customer (Including a Reseller) for Certain Consideration
Received from a Vendor." Management believes that excluding the impact of EITF
02-16 allows investors to compare the results of operations without giving
effect to this new accounting standard.
Founded in 1978, The Home Depot(R) is the world's largest home improvement
specialty retailer and the second largest retailer in the United States, with
fiscal 2003 sales of $64.8 billion. During the quarter, The Home Depot added 38
new stores. At the end of the third quarter of fiscal 2004, the company
operated a total of 1,826 stores, including 1,602 The Home Depot stores in the
United States, 110 The Home Depot stores in Canada, and 42 The Home Depot
stores in Mexico. The company also operates 54 EXPO Design Center locations, 11
The Home Depot Landscape Supply stores, five The Home Depot Supply stores, and
two The Home Depot Floor Stores. The company employs approximately 300,000
associates and today has stores in 50 states, the District of Columbia, Puerto
Rico, eight Canadian provinces and Mexico. Its stock is traded on the New York
Stock Exchange (NYSE: HD) and is included in the Dow Jones Industrial Average
and Standard & Poor's 500 Index. HDE
Statements of The Home Depot's expectations for sales growth, earnings
performance, capital expenditures, store openings and demand for services in
this release constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Such statements are based on
currently available operating, financial and competitive information and are
subject to various risks and uncertainties that could cause actual results to
differ materially from the company's historical experience and its present
expectations. These risks and uncertainties include, but are not limited to,
fluctuations in and the overall condition of the U.S. economy, stability of
costs and availability of sourcing channels, conditions affecting new store
development, the company's ability to integrate the businesses it acquires, the
risk that the cost savings and any revenue synergies from acquisitions may not
be fully realized or may take longer to realize than expected, the company's
ability to implement new technologies and processes, the company's ability to
attract, train and retain highly-qualified associates, unanticipated weather
conditions, and the impact of competition and regulatory and litigation
matters. Undue reliance should not be placed on such forward-looking
statements, as such statements speak only as of the date on which they are
made. Additional information regarding these and other risks is contained in
the company's periodic filings with the Securities and Exchange Commission.
###
For more information, contact:
Financial Community News Media
Diane Dayhoff Jerry Shields
Vice President, Investor Relations Senior Public Relations Manager
(770) 384-2666 (770) 384-2741
diane_dayhoff@homedepot.com jerry_shields@homedepot.com
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 2004 AND NOVEMBER 2, 2003
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
THREE MONTHS ENDED % INCREASE NINE MONTHS ENDED % INCREASE
10-31-04 11-2-03 (DECREASE) 10-31-04 11-2-03 (DECREASE)
-------- ------- ---------- -------- ------- -----------
NET SALES $18,772 $16,598 13.1% $56,282 $49,691 13.3%
Cost of Merchandise Sold 12,520 11,405 9.8 37,601 34,064 10.4
------- ------- ---- ------- -------
GROSS PROFIT 6,252 5,193 20.4 18,681 15,627 19.5
Operating Expenses:
Selling and Store Operating 3,826 3,092 23.7 11,406 9,449 20.7
General and Administrative 370 278 33.1 1,016 841 20.8
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Total Operating Expenses 4,196 3,370 24.5 12,422 10,290 20.7
------- ------- ------- -------
OPERATING INCOME 2,056 1,823 12.8 6,259 5,337 17.3
Interest Income (Expense):
Interest and Investment Income 22 14 57.1 46 41 12.2
Interest Expense (18) (14) 28.6 (49) (48) 2.1
------- ------- ------- -------
Interest, net 4 -- N/A (3) (7) (57.1)
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EARNINGS BEFORE PROVISION
FOR INCOME TAXES 2,060 1,823 13.0 6,256 5,330 17.4
Provision for Income Taxes 743 676 9.9 2,296 1,977 16.1
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NET EARNINGS $ 1,317 $ 1,147 14.8% $ 3,960 $ 3,353 18.1%
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Weighted Average Common Shares 2,191 2,280 (3.9)% 2,213 2,289 (3.3)%
BASIC EARNINGS PER SHARE $ 0.60 $ 0.50 20.0% $ 1.79 $ 1.46 22.6%
Diluted Weighted Average Common Shares 2,199 2,287 (3.8)% 2,221 2,295 (3.2)%
DILUTED EARNINGS PER SHARE $ 0.60 $ 0.50 20.0% $ 1.78 $ 1.46 21.9%
SELECTED HIGHLIGHTS THREE MONTHS ENDED % INCREASE NINE MONTHS ENDED % INCREASE
10-31-04 11-2-03 (DECREASE) 10-31-04 11-2-03 (DECREASE)
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Number of Customer Transactions (1) 324 313 3.5% 999 959 4.2%
Average Ticket (1) $55.53 $52.10 6.6 $55.11 $51.30 7.4
Weighted Average Weekly Sales
per Operating Store (000's) (1) $ 767 $ 775 (1.0) $ 801 $ 796 0.6
Square Footage at End of Period (1) 194 176 10.2 194 176 10.2
Capital Expenditures $1,241 $ 837 48.3 $2,778 $2,508 10.8
Depreciation and Amortization $ 335 $ 281 19.2% $ 971 $ 786 23.5%
(1) Excludes all subsidiaries operating under The Home Depot Supply brand
(Apex Supply Company, Maintenance Warehouse, Your "other" Warehouse,
White Cap Industries and HD Builder Solutions Group) since their
inclusion may cause distortion of the data presented due to
operational differences from our retail stores. The total number of
the excluded locations and their total square footage are immaterial
to our total number of locations and total square footage.
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 2004, NOVEMBER 2, 2003 and FEBRUARY 1, 2004
(Amounts in Millions)
10-31-04 11-2-03 2-1-04
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(UNAUDITED) (UNAUDITED) (AUDITED)
ASSETS
Cash and Cash Equivalents $ 3,375 $ 4,944 $ 2,826
Short-Term Investments -- 22 26
Receivables, net 1,822 1,432 1,097
Merchandise Inventories 10,203 9,002 9,076
Other Current Assets 327 297 303
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Total Current Assets 15,727 15,697 13,328
Property and Equipment, net 21,976 18,876 20,063
Other Assets 1,928 801 1,046
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TOTAL ASSETS $39,631 $35,374 $34,437
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $ 7,159 $ 6,380 $ 5,159
Accrued Salaries and Related Expenses 1,106 851 801
Other Current Liabilities 3,546 3,741 3,594
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Total Current Liabilities 11,811 10,972 9,554
Long-Term Debt 2,151 847 856
Other Long-Term Liabilities 1,922 1,294 1,620
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Total Liabilities 15,884 13,113 12,030
Total Stockholders' Equity 23,747 22,261 22,407
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $39,631 $35,374 $34,437
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THE HOME DEPOT, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
IMPACT OF EITF 02-16 *
FOR THE NINE MONTHS ENDED OCTOBER 31, 2004 AND NOVEMBER 2, 2003
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
AS REPORTED IMPACT OF AS ADJUSTED AS REPORTED % INCREASE
10-31-2004 EITF 02-16* 10-31-2004 11-2-2003 (DECREASE)
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COST OF MERCHANDISE SOLD $37,601 $(650) $38,251 $34,064 12.3%
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GROSS PROFIT 18,681 650 18,031 15,627 15.4
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SELLING AND STORE OPERATING EXPENSES 11,406 820 10,586 9,449 12.0
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OPERATING INCOME 6,259 (170) 6,429 5,337 20.5
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NET EARNINGS 3,960 (108) 4,068 3,353 21.3
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DILUTED EARNINGS PER SHARE $ 1.78 $0.05 $ 1.83 $ 1.46 25.3%
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* The table includes only those line items in the Consolidated
Statements of Earnings impacted by the adoption of EITF 02-16.
In January 2004, the Company adopted EITF 02-16 "Accounting by a Customer
(Including a Reseller) for Certain Consideration Received from a Vendor." The
impact in the first nine months of fiscal 2004 in connection with the adoption
of EITF 02-16 resulted in a reduction of Cost of Merchandise Sold of $650
million, an increase in Selling and Store Operating Expenses of $820 million
and a reduction of Net Earnings of $108 million. The adoption of EITF 02-16 had
a $0.05 per share impact on diluted earnings per share during the first nine
months of the year. We do not expect any further impact on our diluted earnings
per share from the adoption of EITF 02-16.