The Home Depot, Inc. (HD)
Q4 2008 Earnings Call Transcript
February 24, 2009 9:00 a.m. ET

Executives

Diane Dayhoff - Senior Vice President, Investor Relations
Francis Blake – Chairman & Chief Executive Officer
Craig Menear – Executive Vice President - Merchandising
Carol B. Tome - Chief Financial Officer & Executive Vice President - Corporate Services
Mark Holifield - Senior Vice President - Supply Chain
Matt Carey - Executive Vice President & Chief Information Officer
Marvin Ellison – Executive Vice President – U.S. Stores

Analysts

Deborah Weinswig - Citigroup
Colin McGranahan - Sanford C. Bernstein & Co.
Matthew Fassler - Goldman Sachs & Co.
Michael Lasser - Barclays Capital
Gregory Melich - Morgan Stanley
Budd Bugatch - Raymond James & Associates
John Zolidis - Buckingham Research
Maggie Gilliam - Gilliam & Company
Wayne Hood - BMO Capital Markets
Brian Nagel - UBS
Shannon Joseph - Wachovia Capital Markets
Eric Bosshard - Cleveland Research
Christopher Horvers - JPMorgan

Presentation

Operator

Good day, everyone and welcome to today’s Home Depot fourth quarter earnings conference call. Today’s conference is being recorded. If you would like to ask a question during today’s call, please press the “*” key followed by the digit “1” on your touchtone phone. Please note that any prompts entered before this time may not have registered in our system. Beginning today’s discussion is Ms. Diane Dayhoff, Vice President of Investor Relations. Please go ahead, ma’am.

Diane Dayhoff

Thank you, Augusta and good morning to everyone. Welcome to The Home Depot third quarter -- fourth quarter earnings conference call. Joining us on our call today are Frank Blake, Chairman and CEO of The Home Depot; Craig Menear, Executive Vice President, Merchandising; and Carol Tome, Chief Financial Officer and Executive Vice President, Corporate Services.

Following our prepared remarks, the call will be open for analysts’ questions. Questions will be limited to analysts and investors and as a reminder; we would appreciate it if the participants would limit themselves to one question with one follow-up, please.

This conference call is being broadcast real-time on the Internet at www.homedepot.com with links on both our homepage and the Investor Relations section. The replay will also be available on our site. If we are unable to get to your question during the call, please call our Investor Relations Department at 770-384-2387.

Before I turn the call over to Frank, let me remind you that today’s press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission.

Now let me turn the call over to Frank Blake.

Francis Blake

Thank you, Diane and good morning, everyone. Sales for the fourth quarter were $14.6 billion. Comp sales were negative 13%. When adjusted for the seasonal shift caused by having 53 weeks in our fiscal 2007, our comp sales were negative 11.5%.

At the end of January, we announced several actions that we are taking in light of current market conditions. These included shutting down our EXPO businesses, restructuring support positions, and writing down our equity interest in HD Supply. Those actions resulted in $550 million of charges in the fourth quarter. Excluding those charges, diluted earnings per share from continuing operations were $0.19.

Carol will give you more detail in a few minutes on both our fourth quarter and fiscal year numbers. As a general comment, we anticipated a difficult quarter and year and they were all that and more. The issues impacting us are familiar to you all -- the housing market is still depressed; the percent of GDP now spent on housing related construction is at 3.1%. This is the lowest that it has ever been in 60 years of recorded data and we anticipate further deterioration. The credit markets are still stressed for consumers and businesses alike and unemployment continues to increase.

We have seen some improvement in our California and Florida markets in the sense that the rate of decline has slowed but these relative improvements are more than offset by declines elsewhere in the country.

Our Canadian business started the year strong but deteriorated in the second half as the global economy began to weaken. Also, the implementation of the bulk of our core retail pilot occurred in the second half in Canada and that caused some additional distraction in a difficult time. For the year, Canada posted mid-single-digit negative comps. China, while small, had positive comps, and our business in Mexico had another great year with double-digit positive comps.