First-quarter sales inch up for Home Depot

ATLANTA — Home Depot blamed "erratic" weather and a slumping U.S. housing market for its weak financial performance in the three months ended April 29, during which revenue increased just 0.6% to $21.59 billion, business from retail stores declined 4.3% to $18.55 billion, same-store sales slumped by 7.6%, and corporate net income plummeted 29.5% to $1.05 billion. All of these numbers were lower than analysts had expected. One bright spot during the quarter was its HD Supply business, whose fate — which might include being sold off — company officials are still determining. HD Supply's revenue jumped 46% to $3.11 billion. However, this business unit also reported a $20 million operating loss, which was 300% more than the same period a year ago. Although the company does not break out its Canadian numbers, HARDLINES has confirmed that Home Depot's performance in Canada was better than that of the company overall. Both sales and profits were on the positive side north of the border. During the quarter, the parent company's retail transactions fell 1.2% to $318 million; its average sales per customer declined 2.9% to $59.01; and average weekly sales per store were off 9.6% to $665,000. "We believe the home improvement market will remain soft throughout 2007," said Frank Blake, Home Depot's CEO. Nevertheless, the company hasn't stopped upgrading its stores, for which it has increased its capital expenditures budget this year by 29%. "We plan to continue our reinvestment plans for the long-term health of the business, understanding that it will put short-term pressure on earnings." At the end of this quarter, Home Depot operated 2,170 retail locations in five countries, including 155 in Canada. It also ended the quarter with nearly 1,000 wholesale distribution locations.

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Atlantic dealers face down Home Depot light bulb offer

HALIFAX — A provincial campaign to convert consumers to compact fluorescent light bulbs is generating more heat than light for the Premier's office here. The campaign, funded by Conserve Nova Scotia, offers two free CFLs and a $2 coupon to purchase an additional bulb. Despite being a provincially funded program, it was available only through the province's three Home Depot stores, in Halifax, Dartmouth, and Sydney. Besides putting the program out of reach of thousands of Nova Scotians living outside the trading areas of these stores, the giveaway effectively left out more than 200 other chain and independent building centre dealers throughout the province. The promotion had barely gotten under way before the phones started ringing at the offices of the Atlantic Building Supply Dealers Association. Don Sherwood, president of the ABSDA, admits he was perplexed by the government's decision to restrict the program to Home Depot — and fired off a letter to Premier Rodney MacDonald's office to express his concerns. How, he asked, could the province ignore 200-plus retailers for the sake of only three Home Depot stores? Nick Cowling, PR manager for Home Depot Canada, defends the program. He says it required a commitment of everything from staff training and education to a financial investment to make it work. "This is not a simple coupon program. It's much more sophisticated and provides some amazing reporting and results," he says. "We were prepared to share the costs of the program, we have the buying power to give the government the best possible costs, and we have extensive experience in these programs." Home Depot Canada pumped $85,000 into the program, and sold the CFLs at cost. Sherwood at the ABSDA applauds the initiative, and Home Depot's role in it, but would like to see greater accessibility. "There's no way we're faulting Home Depot here," says Sherwood. "But, my gosh, make it universal."

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Zucker reports on Hbc's corporate responsibility

TORONTO — To underscore his company's commitment to environmental sustainability, ethical sourcing, protecting employees, and Canadian communities, Jerry Zucker, governor and CEO of the Hudson's Bay Co., personally announced the release of Hbc's Corporate Social Responsibility Report last week. The report highlighted Hbc's achievements in the past year, which included auditing factories for environmental policies as part of Hbc's participation in the United Nations Millennium Goals; an expanded waste recycling program in its stores that now includes plastic hangers, shrink wrap and corrugated cardboard; and, financial support of 200 Canadian athletes across Canada, who each received a bursary of $5,000. "Consumers are shopping with a conscience," said Zucker in a release. "They want to know what happens beyond the sales floor: how a retailer is environmentally responsible, or what steps they take to protect workers producing the goods in their factories. In that sense, we believe it's increasingly important to provide all of our stakeholders with greater information about Hbc's role as a corporate citizen, and we encourage all Canadian retailers to offer reports to the public about their own practices."

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Retail faces challenges to growth in coming decade

TORONTO — After a heated start to the century, retailers will face some challenges to continued growth. In fact, hardware and home improvement stores can expect their rate of growth to be cut almost in half. Following compound annual growth rate of 8.7% from 2001 to 2006, that sector is expected to grow by only 4.7% annually from 2006 to 2011. Those were just some of the findings presented at this year's Retail Forward Strategic Outlook Conference, held here recently. In his presentation, Al Meyers of Retail Forward noted that Internet retailing will lead, with expected annual growth of 27.7% from 2006 to 2011, while warehouse clubs will drop from 9.2% to 6.4% compounded annually. However, consumer electronics and appliance stores are forecast to increase their annual growth from 5.9% over the past five years to 6.5% between 2006 and 2011. Retail sales in the U.S. are forecast to grow at a compound annual growth rate of 5.2% to 2011, while in Canada that rate will be 4.7%. During that time, China, India, and Russia will emerge as the new powerhouses in consumer spending. Retailers who are investing in services will have an advantage, said Meyers. As baby boom consumers continue to get older, their consumption of goods will decline, but the rate of spending on services will continue to increase.

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Germany has new DIY dealer

COLOGNE — German retailer REWE is buying 133 home improvement outlets from retailer Edeka's Marktkauf business unit, a deal that will make it the country's third-biggest DIY store operator, according to Thomson Financial. Financial details of the transaction were not disclosed, but the annual sales of REWE's DIY unit Tooms will rise to more than €2 billion, from €1.3 billion last year, as a result of the transaction, which needs regulatory approval. Toom's main competitors in Germany are Praktiker and OBI.

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