Home Depot reports 2Q earnings drop

ATLANTA The Home Depot today reported fiscal 2007 second quarter consolidated net earnings of $1.6 billion, or 81 cents per diluted share, compared with $1.9 billion, or 90 cents per diluted share, in the same period in fiscal 2006.

Earnings from continuing operations in the fiscal 2007 second quarter were $1.5 billion, or 77 cents per diluted share, compared to fiscal 2006 second quarter earnings from continuing operations of $1.7 billion, or 82 cents per diluted share. The company is now reflecting the results of HD Supply as a discontinued operation. Earnings from discontinued operations were $66 million, or 3 cents per diluted share, compared to $161 million, or 8 cents per diluted share, in the second quarter of fiscal 2006. Included in earnings from discontinued operations is a discrete tax charge of approximately $60 million related to the disposition of HD Supply. Excluding this discrete charge, adjusted earnings from discontinued operations were approximately $126 million.

Sales for the second quarter totaled $22.2 billion, a 1.8% decrease from the second quarter of fiscal 2006, reflecting negative comparable-store sales of 5.2%, offset in part by sales from new stores.

 The company reiterated in its earnings outlook that it expects its earnings per share from continuing operations to decline by 12%  to 15%  for fiscal 2007. Consolidated earnings per share are expected to decline by 15% to 18% for fiscal 2007.

On Aug. 9, The Home Depot announced that it was in discussions with affiliates of Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice for the purpose of restructuring the previously announced agreement for the sale of HD Supply. These discussions could result, among other things, in material changes to the terms and financing of the transaction, including a reduction in the $10.325 billion purchase price.