Home Depot Inc.'s 2008 sales could drop by as much as eight per cent this year as the U.S. housing slide crimped the company's third quarter profits.
The Atlanta-based home improvement chain said Tuesday it earned $756 million US for the three months ended Nov. 2, a drop of one-third compared to a profit of $1.1 billion for the same period one year earlier.
On a per-share basis, Home Depot made 45 cents a share in the latest quarter versus 60 cents this time last year.
Home Depot, which operates more than 2,200 retail outlets, said sales for the period fell by a total of 6.2 per cent. More worrisome, the company also said that, on a same-store basis, revenue was off by 8.3 per cent for the three months.
In fact, Home Depot now estimates the company's total sales could slump by as much as eight per cent for all of 2008.
"The housing and home improvement markets remain challenging," said Frank Blake, Home Depot's chairman and chief executive officer.
Home Depot's worst-case scenario could have 2008 sales in the range of $71.2 billion, implying fourth-quarter revenue of approximately $14.5 billion. That would represent a substantially poorer quarter compared to sales of $17.7 billion for the same period one year earlier.
For Home Depot, the slump has already meant fewer customers buying less each trip.
The company's average ticketed amount for each transaction stood at $55.86 in the latest quarter. That figure was a drop from the same quarter last year when each cha-ching at the cash register was worth $57.48 to the company's top line.
Tough sector
The American housing market has been hammered in recent months as waning consumer confidence and tightened credit markets have resulted in poorer homes sales and sagging housing construction.
And Home Depot is the latest in a string of home improvement chains, once the darlings of equity investors, who have fallen on tough times.
On Monday, U.S.-based Lowe's Companies Inc. cut its profit outlook for 2008 by a couple of pennies and warned that its stores were seeing significant sales weakness in October and early November.
Recently, Canada's Rona Inc. noted that same-store sales — a measure that removes any sales increase due to the opening of new outlets — were down 2.3 per cent.
And high-end kitchen company Williams-Sonoma Inc. has warned that its '08 sales could also slide by as much as eight per cent this year.
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