The Home Depot forecast their 2007 year and it is looking ugly. The company expects earnings to drop 15 to 18 percent and blames it squarely on the housing slowdown.
Their CFO Carol Tome is not expecting a quick turnaround. She is forecasting the housing slowdown to continue into 2008 and announced a stock buyback plan to capitalize on the low stock prices and weak market.
Home Depot’s revised outlook reflects the recognition of its supply business, which provides building materials to contractors, as a discontinued operation. That unit is set to be sold later this year for $10.3 billion to private equity firms.
“Housing turnover continues to slow and prices continue to come down,” said Keith Davis, an analyst with Farr Miller Washington, which owns Home Depot stock. “People aren’t spending the way they had been on home improvements.”
Home Depot said it expected 2007 total retail sales to decline by 1% to 2% and same-store sales to fall by mid-single digits. Previously, Home Depot had forecast full-year sales growth of 0% to 2%. via CNBC.com
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Blaming their problem solely on some uncontrollable factor sounds like something Home Depot would say.
I personally like Lowes more then Home Depot.
AND, I would take one of the many Local building supply stores in My area anyday…they work deals with you, and offer huge discounts
While the housing market troubles may be a big contributor to Home Depot's decrease in earnings, you can't place the blame squarely on one factor. Smart companies take forecasts like this and adjust their strategy to stay ahead of market trends.
Either that or they're playing down expectations so that a 5 to 10 percent drop in earnings will be seen as a triumph.
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