Home Depot (HD), the largest home improvement retailer in the world, reported net income of $689 million or 41 cents per share in the third quarter of fiscal 2009, compared to net income of $756 million or 45 cents per share in the year-earlier quarter.
The company witnessed severe stress from declining market fundamentals during the quarter in a challenging macroeconomic environment and weakness in the U.S. housing sector. Total sales decreased 8.0% year-over-year to $16.4 billion, while overall same-store sales decreased 6.9%.
In order to tide over the storm, Home Depot has decided to focus on core retail activities and has exited businesses like EXPO, THD Design Center, Yardbirds, and HD Bath. In addition, the company has taken strict cost-control measures and has initiated prudent inventory management policies.
Home Depot was able to gain market share during the quarter amid early signs of stabilization of the home improvement market. At quarter end, the company had a total store count of 2,242. Home Depot continues to have a strong balance sheet. At quarter end, the company had $2.7 billion of cash and short-term investments.
With a current market cap of over $47 billion, Home Depot is comparatively better placed than its peers to weather the current economic downturn. Furthermore, the company has reinvigorated by shifting its focus from new square footage growth to maximization of productivity through its existing store base. In addition, the company has implemented significant changes to its store operations to make them simpler and more customer-friendly, thereby improving its profitability.
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