July 10, 2007 - HD Supply Sale Cuts Into Home Depot Profits
July 10, 2007
Home Depot lowered its profit forecast yesterday and now
expects earnings per share to fall as much as 18 percent this year and annual
sales to fall for the first time in the company’s history.
One reason the company cited for the drop in earnings and
revenue is the pending $10.3 billion sale of HD Supply. The company released a
revised outlook yesterday, reflecting HD Supply as a discontinued operation.
HD Supply would have accounted for 18 cents a share in earnings
in the second half of this year, according to the company. The wholesale
business also generated about 14 percent of total sales.
Home Depot expects overall sales to drop between 1 percent
and 2 percent this year after subtracting the $12 billion in sales HD Supply
contributed to the top line. The company also says it expects declines in the
mid-single digits for comparable-store sales.
The company also said the weakening U.S. housing
market was another factor in the earnings drop. The nation’s home sales in 2007
will fall to their lowest level since the start of the housing boom in 2001,
according to a forecast issued yesterday by Freddie Mac.