EXHIBIT 99.1
[LOGO]
THE HOME DEPOT ANNOUNCES
FIRST QUARTER 2005 RESULTS
o 16.3% EPS Growth to $0.57
o 8.1% Sales Growth to $19 Billion
o Record Average Ticket of $58.25
o Record Gross Margin of 33.5%
o Record Operating Margin of 10.5%
ATLANTA, MAY 17, 2005 - The Home Depot(R), the world's largest home
improvement retailer, today reported first quarter net earnings of $1.2 billion,
$0.57 per diluted share, up 16.3 percent, for the first quarter of fiscal 2005,
compared with $1.1 billion, $0.49 per diluted share, for first quarter of fiscal
2004.
Sales for the period increased $1.4 billion, or 8.1 percent to $19
billion. Growth in comparable store sales was 2.1 percent.
"Through the hard work and dedication of our 325,000 associates we
effectively managed our business, produced solid earnings growth and stayed on
strategy," said Bob Nardelli, chairman, president & CEO. "Our relentless focus
on our customers is delivering solid progress in key satisfaction metrics."
During the first quarter, the company increased its annual dividend by
23 percent while the Board of Directors approved an additional $2 billion in
share repurchases, bringing the total authorized share repurchases under the
plan to $9 billion. During the first quarter, the company repurchased $1.4
billion or 36 million shares. Over the past four years, the company has
repurchased $8.1 billion of its outstanding shares.
The company announced its intent to dispose of its interest in the
underlying real estate of 15 EXPO Design Center ("EXPO") stores. At some point
in the future, these stores will close. Further, the company announced plans to
convert five EXPO stores to The Home Depot store format. In the first quarter of
fiscal 2005, the company recorded $86 million of expense related to the
anticipated disposition of its interest in the underlying real estate and $20
million of expense related to inventory markdowns. The remaining 34 EXPO stores
are profitable and will continue operating. Affected EXPO customers will be
served by existing The Home Depot and EXPO stores.
"Excluding the impact of the EXPO announcement, we leveraged expenses
in the first quarter, demonstrating our ability to execute," said Carol Tome,
executive vice president and CFO. "We continue to deliver strong rates of return
on the capital we deploy, with a return on invested capital of 22 percent." At
the end of the first quarter, the company reported total assets of $42 billion
and total stockholders' equity of $24 billion.
The company reconfirmed its fiscal 2005 sales growth guidance of 9-12
percent and its earnings per share growth guidance of 10-14 percent.
ENHANCING THE CORE
"The stores were well-prepared for spring and as the weather breaks
across the country, we are positioned to take care of our customers," said Tom
Taylor, executive vice president, Stores. "Through some of the changes we've
made to our store organization structure, our business today retains the
entrepreneurial
spirit of The Home Depot matched with the benefits of a centralized leadership
team. Now more than ever before, we are able to better manage our business while
staying on strategy."
By broadening its current assortment of merchandise as well as adding
new innovative and distinctive merchandise, The Home Depot achieved a record
average ticket of $58.25 for the first quarter of fiscal 2005, representing an
increase of 5.7 percent compared to the prior year.
"Customers are responding to our expanded assortment of patio
furniture and outdoor grills as well as our continued innovation of power tools
as we introduced new products to the RIDGID(R) and Ryobi One+ System(TM) power
tool lines," said John Costello, executive vice president, Merchandising and
Marketing. "In addition, according to an independent third party, the company's
appliance share, on a rolling 12-month basis, increased by 180 basis points in
the first quarter. This is a result of the efforts made by our dedicated sales
associates and our broadened assortment. The addition of the LG appliance line,
expected during the second quarter, will continue to expand our selection."
As part of the company's enhance strategy, significant first quarter
accomplishments included:
o Continued investment in store technology with auto replenishment in
1,890 stores, supporting nine percent of store sales
o Established a state-of-the-art data center in Austin, Texas
o Continued store modernization with resets across a variety of
categories, including outdoor living, barbeque grills and faucets
EXTENDING THE BUSINESS
During the quarter, the company opened 21 net new stores across Canada,
Mexico and the United States, bringing the total store count to 1,911.
Building on the growing demand for do-it-for-me services, the company's
services business grew 16 percent during the first quarter of fiscal 2005. The
Home Depot saw strong growth in categories such as roofing, kitchens,
countertops, windows and carpet installation. The company expects to sustain
double-digit growth in this area as do-it-for-me customers continue to be
attracted to the convenience and quality of the company's offerings.
EXPANDING THE MARKET
During the first quarter, the company continued its strategy by growing
its market and global presence. At the end of the first quarter, nine percent of
its stores were located in Canada and Mexico, and the company continues to build
upon its plan to enter the retail market in China.
The company expanded its growth within The Home Depot Supply. In
February, White Cap Construction Supply, Inc., a leading professional
distribution business, expanded its presence in the Eastern part of the U.S.
through its acquisition of Greenwald Supply, a construction, building, and
specialty materials supply company. Today, White Cap has 80 branches in 19
states. During the first quarter, Builder Solutions Group, the largest installer
of flooring and countertops to professional homebuilders, completed the
acquisition of Grand Floor Design, primarily a flooring installation company
with 11 locations in Northern California and Nevada, and, in April, announced
its intent to acquire Landmark Interiors Inc., a design center serving
homebuilders in the Phoenix market. Builder Solutions Group has 31 branches in
15 states. The Home Depot Supply expanded its presence in Canada through the
acquisition of Litemor, a leading lighting distributor. The Home Depot Supply
reported double-digit sales growth in the quarter.
OTHER RECENT EVENTS
o Received the 2005 Private Sector Leadership Award by Partnership for
Public Service in May
o Ranked 4th on the HACR Corporate Responsibility Index by the
Hispanic Association for Corporate Responsibility in May
o Named Most Admired Specialty Retailer by Fortune magazine
o Awarded the M.B. Zale Visionary Merchant Award by Center for
Retailing Studies at Texas A&M University
o Received the Distinguished Service Award by Military Officers
Association of America
o Received the Energy Star Retail Commitment Award by the
Environmental Protection Agency
The Home Depot will conduct a conference call today at 9:00 a.m. EST to
discuss information included in this news release and related matters. The
conference call will be available in its entirety through a Web cast and replay
at http://www.homedepot.com under the Investor Relations section.
During the first quarter of 2005, The Home Depot added 21 new stores.
At the end of the first quarter of fiscal 2005, the company operated a total of
1,911 stores, which included 1,839 The Home Depot stores with 1,674 stores in
the United States, 120 stores in Canada, and 45 stores in Mexico. The company
also operates 54 EXPO Design Centers, 11 The Home Depot Landscape Supply stores,
two The Home Depot Floor Stores and five The Home Depot Supply stores. At the
end of fiscal 2004, The Home Depot employed approximately 325,000 associates.
Its stock is publicly traded (NYSE: HD) and is included in the Dow Jones
Industrial Average and the Standard & Poor's 500 Index.
Certain statements contained herein, including those regarding net sales growth,
increases in comparable store sales, impact of cannibalization, commodity price
inflation and deflation, implementation of store initiatives, net earnings
performance, including depreciation expense and stock-based compensation
expense, store openings and closures, capital allocation and expenditures, the
effect of adopting certain accounting standards, strategic direction and the
demand for our products and services, constitute "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995. These
statements are based on currently available information and are based on our
current expectations and projections about future events. These statements are
subject to risks and uncertainties that could cause actual results to differ
materially from our historical experience and expectations. These risks and
uncertainties include, but are not limited to: economic conditions in North
America; changes in our cost structure; the availability of sourcing channels
consistent with our strategy of differentiation; conditions affecting new store
development; conditions affecting customer transactions and average ticket,
including, but not limited to, weather conditions; the success of our technology
initiatives in improving operations and customers' in-store experience; our
ability to identify and respond to evolving trends in demographics and consumer
preferences; the relative success of our expansion strategy, including our
ability to integrate acquisitions and create appropriate distribution channels
for key sales platforms; our ability to attract, train and retain
highly-qualified associates; the impact of new accounting standards; and the
impact of competition, decisions by management related to possible asset
impairments, regulation and litigation matters. Undue reliance should not be
placed on such forward-looking statements as they speak only as of the date
made. Additional information regarding these and other risks and uncertainties
is contained in our periodic filings with the SEC, including our Annual Report
on Form 10-K for the fiscal year ended January 30, 2005.
###
FOR FURTHER INFORMATION, CONTACT:
Financial Community News Media
Diane Dayhoff Jerry Shields
Vice President of 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 ENDED MAY 1, 2005 AND MAY 2, 2004
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
THREE MONTHS ENDED
------------------------------- % INCREASE
5-1-05 5-2-04 (DECREASE)
----------- ---------- ----------
NET SALES $ 18,973 $ 17,550 8.1 %
Cost of Merchandise Sold 12,618 11,782 7.1
---------- ----------
GROSS PROFIT 6,355 5,768 10.2
Operating Expenses:
Selling, General and Administrative 4,019 3,727 7.8
Depreciation 337 295 14.2
---------- ----------
Total Operating Expenses 4,356 4,022 8.3
OPERATING INCOME 1,999 1,746 14.5
Interest Income (Expense):
Interest and Investment Income 14 10 40.0
Interest Expense (27) (14) 92.9
---------- ----------
Interest, net (13) (4) 225.0
---------- ----------
EARNINGS BEFORE PROVISION
FOR INCOME TAXES 1,986 1,742 14.0
Provision for Income Taxes 739 644 14.8
---------- ----------
NET EARNINGS $ 1,247 $ 1,098 13.6 %
========== ==========
Weighted Average Common Shares 2,162 2,242 (3.6)
BASIC EARNINGS PER SHARE $ 0.58 $ 0.49 18.4 %
Diluted Weighted Average Common Shares 2,172 2,250 (3.5)%
DILUTED EARNINGS PER SHARE $ 0.57 $ 0.49 16.3 %
SELECTED HIGHLIGHTS
- -------------------
THREE MONTHS ENDED
------------------------------- % INCREASE
5-1-05 5-2-04 (DECREASE)
----------- ---------- ----------
Number of Customer Transactions (1) 320 316 1.3 %
Average Ticket (1) $ 58.25 $55.11 5.7
Weighted Average Weekly Sales
per Operating Store (000's) (1) $ 757 $ 775 (2.3)
Square Footage at End of Period (1) 203 186 9.1
Capital Expenditures $ 821 $ 680 20.7
Depreciation and Amortization(2) $ 361 $ 312 15.7 %
(1) Excludes all subsidiaries operating under The Home Depot Supply brand (Apex
Supply Company, Inc., The Home Depot Supply, Inc., Your Other Warehouse, LLC,
White Cap Industries, Inc. and HD Builder Solutions Group, Inc.) 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.
(2) Includes depreciation of distribution centers and tool rental equipment
included in Cost of Merchandise Sold and amortization of deferred financing
costs included in Interest Expense.
THE HOME DEPOT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MAY 1, 2005, MAY 2, 2004 AND JANUARY 30, 2005
(AMOUNTS IN MILLIONS)
5-1-05 5-2-04 1-30-05
-------------- -------------- --------------
(UNAUDITED) (UNAUDITED) (AUDITED)
ASSETS
Cash and Short-Term Investments $ 2,992 $ 4,300 $ 2,165
Receivables, net 1,973 1,502 1,499
Merchandise Inventories 11,305 10,110 10,076
Other Current Assets 569 377 450
----------- -------- ----------
Total Current Assets 16,839 16,289 14,190
Property and Equipment, net 23,031 20,351 22,726
Other Assets 2,087 1,308 1,991
----------- --------- ----------
TOTAL ASSETS $ 41,957 $ 37,948 $ 38,907
=========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable $ 8,035 $ 7,368 $ 5,766
Accrued Salaries and Related Expenses 1,001 943 1,055
Other Current Liabilities 4,733 4,401 3,708
----------- --------- ----------
Total Current Liabilities 13,769 12,712 10,529
Long-Term Debt 2,145 1,126 2,148
Other Long-Term Liabilities 2,222 1,688 2,072
----------- ----------- ----------
Total Liabilities 18,136 15,526 14,749
Total Stockholders' Equity 23,821 22,422 24,158
----------- ----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 41,957 $ 37,948 $ 38,907
=========== =========== ==========
THE HOME DEPOT, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
FOR THE THREE MONTHS ENDED MAY 1, 2005 AND MAY 2, 2004
(UNAUDITED)
(AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA AND AS OTHERWISE NOTED)
AS REPORTED AS ADJUSTED AS REPORTED % INCREASE
5-1-2005 ADJUSTMENTS* 5-1-2005 5-2-2004 (DECREASE)
----------- ------------ ----------- ----------- ----------
COST OF MERCHANDISE SOLD $ 12,618 $ 20 $ 12,598 $ 11,782 6.9 %
--------- ------ -------- --------- ----
GROSS PROFIT 6,355 (20) 6,375 5,768 10.5
--------- ------ -------- --------- ----
SELLING, GENERAL & ADMINISTRATIVE EXPENSE 4,019 86 3,933 3,727 5.5
--------- ------ -------- --------- ----
OPERATING INCOME 1,999 (106) 2,105 1,746 20.6
--------- ------ -------- --------- ----
NET EARNINGS 1,247 (67) 1,314 1,098 19.7
--------- ------ -------- --------- ----
DILUTED EARNINGS PER SHARE $ 0.57 $ (0.03) $ 0.60 $ 0.49 22.4 %
--------- ------ -------- --------- ----
* The Company announced its intent to dispose of its interest in the underlying
real estate of 15 EXPO Design Center ("EXPO") stores and its plan to convert an
additional five EXPO stores to The Home Depot store format. As a result, during
the first quarter of 2005, the Company recorded an increase in Cost of
Merchandise Sold of $20 million for markdowns of inventory in these stores and
$86 million of expense related to the disposition of its interest in the
underlying real estate. In addition, the Company expects to incur $13 million of
additional expense as it completes the final disposition of its interest in the
real estate during the remainder of fiscal 2005. The table includes only those
line items in the Consolidated Statements of Earnings impacted by this
announcement.