Home Depot's fiscal Q4 earnings fell 0.8% from a year ago to US$1.02B as sales fell 3% to US$17.7B, comparable-store sales rose 4.4%; for fiscal 2013, earnings rose 18.7% to US$5.39B, sales rose 5.4% to US$78.8B, comparable-store sales climbed 6.8%

ATLANTA , February 25, 2014 (press release) – The ®, the world's largest home improvement retailer, today reported that comparable store sales for the fourth quarter of fiscal 2013 increased 4.4 percent, and comp sales for U.S. stores were positive 4.9 percent. Total sales for the fourth quarter of fiscal 2013 were $17.7 billion, a 3.0 percent decrease from the fourth quarter of fiscal 2012. The fourth quarter of fiscal 2013 consisted of 13 weeks compared with 14 weeks of sales in the fourth quarter of fiscal 2012. The 14th week added approximately $1.2 billion in sales for the fourth quarter and fiscal year in 2012. Excluding the additional week in 2012, sales for the fourth quarter were up 3.9 percent from the prior year.

Net earnings for the fourth quarter of fiscal 2013 were $1.0 billion, or $0.73 per diluted share, compared with net earnings of $1.0 billion, or $0.68 per diluted share, in the same period of fiscal 2012, reflecting a 7.4 percent increase in diluted earnings per share. The 14th week in the fourth quarter of fiscal 2012 increased earnings per diluted share by approximately $0.07 in the fourth quarter and fiscal year in 2012. Excluding the 14th week in the prior year, earnings per diluted share increased by 19.7 percent in the fourth quarter of fiscal 2013.

Fiscal 2013

Sales for fiscal year 2013 were $78.8 billion, an increase of 5.4 percent from fiscal year 2012. Excluding the 53rd week in the prior fiscal year, sales for fiscal year 2013 increased 7.2 percent from fiscal 2012. Total company comparable store sales for fiscal year 2013 increased 6.8 percent, and comp sales for U.S. stores were positive 7.5 percent for the year.

Earnings per diluted share in fiscal year 2013 were $3.76, compared to $3.00 per diluted share in fiscal year 2012, an increase of 25.3 percent. Excluding the 53rd week in the prior fiscal year, earnings per diluted share increased by 28.3 percent.

"In 2013, we posted our strongest comp sales growth in 14 years as solid execution and the recovering housing market aided our performance," said Frank Blake, chairman & CEO. "I'd like to thank our associates for their hard work and commitment to our customers."

Dividend Increase

The Company today announced that its board of directors declared a 21 percent increase in its quarterly dividend to $0.47 cents per share. "As a testament to our commitment to create value for our shareholders, the board increased the dividend for the fifth time in as many years," said Blake. "Increasing the dividend reflects our continued strategy to target a dividend payout ratio of 50 percent." The dividend is payable on March 27, 2014, to shareholders of record on the close of business on March 13, 2014. This is the 108th consecutive quarter the Company has paid a cash dividend.

Fiscal 2014 Guidance

The Company provided the following guidance for fiscal year 2014:

  • Sales growth of approximately 4.8 percent
  • Comparable store sales growth of approximately 4.6 percent
  • Seven new stores
  • Flat gross margin
  • Operating margin expansion of approximately 70 basis points
  • Tax rate of approximately 37 percent
  • Share repurchases of approximately $5 billion
  • Diluted earnings-per-share growth after anticipated share repurchases of approximately 16.5 percent to $4.38
  • Capital spending of approximately $1.5 billion
  • Depreciation and amortization of approximately $1.8 billion
  • Cash flow from the business of approximately $8.8 billion

The will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. The conference call will be available in its entirety through a webcast and replay at earnings.homedepot.com.

At the end of the fourth quarter, the Company operated a total of 2,263 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico. The Company employs more than 300,000 associates. The stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index.

To provide clarity, internally and externally, about the Company's operating performance for recently completed fiscal periods, the Company has supplemented its reporting with non-GAAP financial measures to reflect the impact of the closing of seven stores in China in fiscal 2012. The Company believes that these non-GAAP financial measures better enable management and investors to understand and analyze the Company's performance by providing them with meaningful information relevant to events of unusual nature or frequency that impact the comparability of underlying business results from period to period. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. A reconciliation of the non-GAAP financial measures to the comparable GAAP measures can be found attached to this press release and at http://earnings.homedepot.com.

Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of the residential construction, housing and home improvement markets, effects of competition, state of the credit markets, including mortgages, home equity loans and consumer credit, inventory and in-stock positions, commodity price inflation and deflation, implementation of store, interconnected retail and supply chain initiatives, continuation of share repurchase programs, net earnings performance, earnings per share, dividend targets, capital allocation and expenditures, liquidity, return on invested capital, management of relationships with our suppliers and vendors, stock-based compensation expense, the effect of accounting charges, the effect of adopting certain accounting standards, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage, guidance for fiscal 2014 and beyond and financial outlook.  Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control or are currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to those described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended February 3, 2013 and in our subsequent Quarterly Reports on Form 10-Q.

Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the Securities and Exchange Commission.

 

THE , INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE MONTHS AND FISCAL YEARS ENDED FEBRUARY 2, 2014 AND FEBRUARY 3, 2013

(Unaudited)

(Amounts in Millions Except Per Share Data and as Otherwise Noted)

 
   

Three Months Ended(1)

 

% Increase

(Decrease)

 

Fiscal Year Ended(1)

 

% Increase

(Decrease)

   

February 2, 2014

 

February 3, 2013

 

February 2, 2014

 

February 3, 2013

 

NET SALES

 

$

17,696

   

$

18,246

   

(3.0)

%

 

$

78,812

   

$

74,754

   

5.4

%

Cost of Sales

 

11,504

   

11,880

   

(3.2)

   

51,422

   

48,912

   

5.1

 

GROSS PROFIT

 

6,192

   

6,366

   

(2.7)

   

27,390

   

25,842

   

6.0

 

 

Operating Expenses:

                       

Selling, General and Administrative

 

4,024

   

4,217

   

(4.6)

   

16,597

   

16,508

   

0.5

 

Depreciation and Amortization

 

407

   

399

   

2.0

   

1,627

   

1,568

   

3.8

 

Total Operating Expenses

 

4,431

   

4,616

   

(4.0)

   

18,224

   

18,076

   

0.8

 

 

OPERATING INCOME

 

1,761

   

1,750

   

0.6

   

9,166

   

7,766

   

18.0

 

 

Interest and Other (Income) Expense:

                       

Interest and Investment Income

 

(4)

   

(6)

   

(33.3)

   

(12)

   

(20)

   

(40.0)

 

Interest Expense

 

182

   

166

   

9.6

   

711

   

632

   

12.5

 

Other

 

   

   

   

   

(67)

   

(100.0)

 

Interest and Other, net

 

178

   

160

   

11.3

   

699

   

545

   

28.3

 

 

EARNINGS BEFORE PROVISION FOR

INCOME TAXES

 

1,583

   

1,590

   

(0.4)

   

8,467

   

7,221

   

17.3

 

 

Provision for Income Taxes

 

570

   

569

   

0.2

   

3,082

   

2,686

   

14.7

 
                         

NET EARNINGS

 

$

1,013

   

$

1,021

   

(0.8)

%

 

$

5,385

   

$

4,535

   

18.7

%

                         

Weighted Average Common Shares

 

1,382

   

1,479

   

(6.6)

%

 

1,425

   

1,499

   

(4.9)

%

BASIC EARNINGS PER SHARE

 

$

0.73

   

$

0.69

   

5.8

   

$

3.78

   

$

3.03

   

24.8

 

 

Diluted Weighted Average Common Shares

 

1,391

   

1,491

   

(6.7)

%

 

1,434

   

1,511

   

(5.1)

%

DILUTED EARNINGS PER SHARE

 

$

0.73

   

$

0.68

   

7.4

   

$

3.76

   

$

3.00

   

25.3

 
                         
   

Three Months Ended(1)

 

% Increase

(Decrease)

 

Fiscal Year Ended(1)

 

% Increase

(Decrease)

SELECTED HIGHLIGHTS(2)

 

February 2, 2014

 

February 3, 2013

 

February 2, 2014

 

February 3, 2013

 

Number of Customer Transactions

 

316.0

   

329.1

   

(4.0)

%

 

1,390.6

   

1,364.0

   

1.9

%

Average Ticket (actual)

 

$

56.08

   

$

55.46

   

1.1

   

$

56.78

   

$

54.89

   

3.4

 

Sales per Square Foot (actual)

 

$

300.29

   

$

294.75

   

1.9

   

$

334.35

   

$

318.63

   

4.9

 

—————

(1)

The three months ended February 2, 2014 includes 13 weeks and the three months ended February 3, 2013 includes 14 weeks. The fiscal year ended February 2, 2014 includes 52 weeks and the fiscal year ended February 3, 2013 includes 53 weeks. The additional week included in the three months and fiscal year ended February 3, 2013 added approximately $1.2 billion in Net Sales and $0.07 in Diluted Earnings per Share.

(2)

The additional week included in the three months and fiscal year ended February 3, 2013 increased customer transactions by approximately 21 million for both the three months and fiscal year ended February 3, 2013, positively impacted average ticket by approximately $0.21 and $0.06 for the three months and fiscal year ended February 3, 2013, respectively, and positively impacted sales per square foot by approximately $5.07 and $5.51 for the three months and fiscal year ended February 3, 2013, respectively.

 

 

THE , INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS ITEMS EXCLUDING CERTAIN ADJUSTMENTS (NON-GAAP)

FOR THE THREE MONTHS AND FISCAL YEAR ENDED FEBRUARY 3, 2013

(Unaudited)

(Amounts in Millions Except Per Share Data)

 
 

Three Months Ended February 3, 2013(1)

 

Actuals

 

China Store

Closings(2)

 

As Adjusted

(Non-GAAP)

Gross Profit

$

6,366

   

$

   

$

6,366

 

Selling, General and Administrative

4,217

   

(20)

   

4,237

 

Operating Income

1,750

   

20

   

1,730

 

Net Earnings

1,021

   

20

   

1,001

 

Diluted Earnings per Share

$

0.68

   

$

0.01

   

$

0.67

 
           
 

Fiscal Year Ended February 3, 2013(1)

 

Actuals

 

China Store

Closings(2)

 

As Adjusted

(Non-GAAP)

Gross Profit

$

25,842

   

$

(10)

   

$

25,852

 

Selling, General and Administrative

16,508

   

135

   

16,373

 

Operating Income

7,766

   

(145)

   

7,911

 

Net Earnings

4,535

   

(145)

   

4,680

 

Diluted Earnings per Share

$

3.00

   

$

(0.10)

   

$

3.10

 

—————

(1)

The three months ended February 3, 2013 includes 14 weeks and the fiscal year ended February 3, 2013 includes 53 weeks.

(2)

Adjustments are related to the closing of seven stores in China.

 

 

 

THE , INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF FEBRUARY 2, 2014 AND FEBRUARY 3, 2013

(Unaudited)

(Amounts in Millions)

 
   

February 2,
 2014

 

February 3,
 2013

ASSETS

       

Cash and Cash Equivalents

 

$

1,929

   

$

2,494

 

Receivables, net

 

1,398

   

1,395

 

Merchandise Inventories

 

11,057

   

10,710

 

Other Current Assets

 

895

   

773

 

Total Current Assets

 

15,279

   

15,372

 

 

Property and Equipment, net

 

23,348

   

24,069

 

Goodwill

 

1,289

   

1,170

 

Other Assets

 

602

   

473

 

TOTAL ASSETS

 

$

40,518

   

$

41,084

 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

       

Accounts Payable

 

$

5,797

   

$

5,376

 

Accrued Salaries and Related Expenses

 

1,428

   

1,414

 

Current Installments of Long-Term Debt

 

33

   

1,321

 

Other Current Liabilities

 

3,491

   

3,351

 

Total Current Liabilities

 

10,749

   

11,462

 

 

Long-Term Debt, excluding current installments

 

14,691

   

9,475

 

Other Long-Term Liabilities

 

2,556

   

2,370

 

Total Liabilities

 

27,996

   

23,307

 

 

Total Stockholders' Equity

 

12,522

   

17,777

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

40,518

   

$

41,084

 

 

 

THE , INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR FISCAL YEARS ENDED FEBRUARY 2, 2014 AND FEBRUARY 3, 2013

(Unaudited)

(Amounts in Millions)

 
   

Fiscal Year Ended(1)

   

February 2,
 2014

 

February 3,
 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

       

Net Earnings

 

$

5,385

   

$

4,535

 

Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:

       

Depreciation and Amortization

 

1,757

   

1,684

 

Stock-Based Compensation Expense

 

228

   

218

 

Changes in Working Capital and Other

 

258

   

538

 

Net Cash Provided by Operating Activities

 

7,628

   

6,975

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

       

Capital Expenditures

 

(1,389)

   

(1,312)

 

Payments for Businesses Acquired, net

 

(206)

   

(170)

 

Proceeds from Sales of Property and Equipment

 

88

   

50

 

Net Cash Used in Investing Activities

 

(1,507)

   

(1,432)

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

       

Proceeds from Long-Term Borrowings, net of discount

 

5,222

   

 

Repayments of Long-Term Debt

 

(1,289)

   

(32)

 

Repurchases of Common Stock

 

(8,546)

   

(3,984)

 

Proceeds from Sales of Common Stock

 

241

   

784

 

Cash Dividends Paid to Stockholders

 

(2,243)

   

(1,743)

 

Other Financing Activities

 

(37)

   

(59)

 

Net Cash Used in Financing Activities

 

(6,652)

   

(5,034)

 

 

Change in Cash and Cash Equivalents

 

(531)

   

509

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

(34)

   

(2)

 

Cash and Cash Equivalents at Beginning of Period

 

2,494

   

1,987

 

 

Cash and Cash Equivalents at End of Period

 

$

1,929

   

$

2,494

 

—————

(1)

Fiscal year ended February 2, 2014 includes 52 weeks. Fiscal year ended February 3, 2013 includes 53 weeks.


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