The Home Depot reported a 20 percent drop in
fourth-quarter profits Tuesday and said it is still struggling with
sluggish sales and weak prices for its products.
The world's largest home-improvement retailer said its
fourth-quarter net income was $465 million, or 20 cents per share.
That matched the lowered forecast of analysts surveyed by First
Call/Thomson Financial.
Atlanta-based Home Depot warned Jan. 19 that the slowing economy
would hurt its results, prompting the lowered forecast.
In a conference call with analysts last month, Home Depot
President Robert Nardelli said the economy made consumers nervous
and kept sales flat during the quarter. On Tuesday, he reiterated
that complaint.
"The uncertainty of the current economy continues to put
tremendous pressure on consumer spending," Nardelli said.
In the same period a year ago, Home Depot earned $578 million,
or 25 cents per share, but the company said that sales related to
preparations for the Y2K computer bug affected those results.
The company said its fourth-quarter sales were $10.46 billion,
up from $9.17 billion a year earlier.
Sales increased 19 percent last year, to $45.7 billion, from
$38.4 billion in 1999. But sales at stores open at least a year — a
crucial measurement for retailers — were flat during the quarter.
Home Depot said weak lumber prices, which hit an eight-year low
during the last three months of 2000, affected sales by 2 percent.
For the year, Home Depot said it earned $2.58 billion, or $1.10
per share, up 11 percent from the $2.32 billion, or $1 per share,
it reported in 1999. Before the weak fourth quarter, analysts had
expected Home Depot to earn $1.14 per share in 2000.
Several analysts have said a 10 percent storewide discount Home
Depot offered for four days in December was a drag on the results
and an ill-advised measure to cut inventory. The company said the
sale helped it move $100 million worth of merchandise from stores.
