The Home Depot announces First Quarter 2006 results
Casual Living Staff -- Casual Living, May 19, 2006
The Home Depot reported first quarter net earnings of $1.5 billion, or 70 cents per diluted share, compared to 57 cents per diluted share and net earnings of $1.2 billion reported for the same period in fiscal 2005. This resulted in a 22.8% increase in earnings per diluted share over the first quarter of fiscal 2005.
Sales for the first quarter of fiscal 2006 totaled $21.5 billion, a 13.1% increase from the first quarter of fiscal 2005.
"This quarter marked a milestone for The Home Depot with the acquisition of Hughes Supply," said Bob Nardelli, chairman, president and CEO of The Home Depot. "We are pleased to welcome the Hughes associates to our team."
During the first quarter, the company acquired Hughes Supply. The transaction more than doubled the size of Home Depot Supply, which now has more than 20,000 associates operating in more than 900 locations nationwide and in Canada with projected fiscal 2006 sales approaching $12 billion. The results of Hughes Supply are included in Home Depot's consolidated results beginning March 30, the date of acquisition.
The Home Depot now operates and provides financial information for two business segments: HD Retail and HD Supply.
"The Home Depot has a disciplined approach to capital allocation and growth," said Carol Tome, executive vice president and CFO. "At the end of the quarter, we reached a return on invested capital of 24.2 percent, up 220 basis points from the first quarter of fiscal 2005."
In the first quarter, the board of directors authorized an additional $1 billion in share repurchases, bringing the total share repurchase authorization to $12 billion. During the first quarter, Home Depot repurchased $565 million or 14 million shares. Since its share repurchase program began in 2002, the company has repurchased 291 million, or approximately 13% of its outstanding shares and spent $10.3 billion under its $12 billion authorization. In January 2006, the company increased its quarterly dividend by 50%. Over the past five years, Home Depot's dividend has increased by 275%.
At the end of the first quarter, the Company reported total assets of $52.7 billion, up 18% from the end of fiscal 2005 reflecting the impact of the Hughes acquisition and total stockholders' equity of $27.8 billion.
The company saw average ticket growth across all merchandise categories. In the first quarter of fiscal 2006, The Home Depot increased its average ticket by 4.3% to a record $60.75.
"Our stores are well prepared for spring and summer with an unprecedented number of new and exclusive products," said Tom Taylor, executive vice president, merchandising and marketing. "Throughout 2006, we will continue our focus on providing distinctive, one-of-a-kind merchandise and creating excitement in our stores. Beginning in this quarter, we are accelerating the reset activity in 500 of our highest volume stores and will reset over 100 bays in each of those stores by year-end."
Significant first quarter merchandising accomplishments included the introduction of the most comprehensive lineup of top brand lawn tractors and mowers available nationwide: Cub Cadet, Toro, John Deere and Honda; and the launch of several new, exclusive product lines, including unique outdoor living products, such as the Hampton Bay solar-powered umbrella and Vigoro lawn and VIVA! garden products.
During the quarter, Home Depot opened 23 new stores, including four relocations, with four new stores in Canada and two new stores in Mexico, bringing the total store count to 2,051. As of the end of the quarter, approximately 10% of that store base was in Canada and Mexico.
Home Depot's retail services business grew by 8.5% to $844 million in the first quarter of fiscal 2006. Categories such as countertops, windows, solar and exterior patios and doors reported solid growth.
On May 1, the company acquired Home Decorators Collection, a leader in catalog and online sales of home decor merchandise. HDC is part of Home Depot Direct, the direct-to-consumer division of The Home Depot. With HDC, Home Depot Direct will be a $1 billion business by the end of fiscal 2006. Home Depot Direct provides customers with an "endless aisle" of home improvement and decor merchandise through in-store catalogs, mail-order catalogs and Web sites that enhance and extend the special order offerings in the company's retail stores.
Serving business-to-business customers, including home builders, professional contractors, municipalities and maintenance professionals, Home Depot Supply provides professional customers with a continuum of products and services from infrastructure through construction to lifetime maintenance.
"With the acquisition of Hughes Supply, we are well positioned to serve our professional customers and gain a greater share of the more than $400 billion professional contractor market," said Joe DeAngelo, executive vice president, Home Depot Supply. "I am very pleased that our Hughes integration is off to a great start and is already ahead of expectations in terms of driving sales, managing costs and achieving synergies."
On May 1, Home Depot also acquired Cox Lumber, the largest privately owned lumber company in Florida. Cox Lumber joins the company's Williams Brothers business and together now operate 46 branches in the Atlanta and Central Florida markets.
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