Atlanta: Home Depot reported a 66% drop in quarterly profit on Tuesday as the U.S. housing meltdown hurt sales and it took a charge to close stores and cut back expansion plans.
The home improvement industry leader said earnings fell to $356 million, or 21 cents a share, in the first quarter ended on May 4 from $1.05 billion, or 48 cents a share, a year earlier.
Results included a charge of $543 million to close 15 underperforming U.S. stores and scrap plans to open 50 outlets that had been in the company’s pipeline.
Excluding the charge, profit was 41 cents a share, compared with the analysts’ average forecast of 37 cents, according to Reuters Estimates.
Total sales fell 3.4% to $17.9 billion, compared with analysts’ estimates of $17.63 billion. Sales at stores open at least a year, or same-store sales, fell 6.5%.
Home Depot, which has stepped up investments to upgrade existing stores and hire more trade specialists, said its average purchase fell 2.8 percent to $57.36 for the quarter, while customer transactions fell 1.3%.
Many retailers are slowing store growth as recession worries and higher prices for gasoline and food cut into consumer spending.
But the crumbling U.S. housing market has compounded troubles for Home Depot and smaller rival Lowe’s Cos as plummeting home values, slower sales and tighter credit curb demand for big-ticket renovations.
“The housing and home improvement markets remained difficult in the first quarter; in fact, conditions worsened in many areas of the country,” Home Depot Chairman Frank Blake said in a statement.
On Monday, Lowe’s said profit fell 18% in the first quarter ended on May 2, while sales declined 1.3%. It also cut its full-year earnings forecast.
Home Depot did not update its full-year earnings outlook ahead of its analyst meeting set for June 5. In early May, it had said it expected per-share profit to fall as much as 24 percent for the period.