Home Depot

The Home Depot Inc.

Types of risk that home depot faces.

The Home Depot is starting to feel the crunch of the economic status that our nation is in right now. While many people are starting to do their own home renovations now many of the companies that use to “flip” homes are no longer around or they are not spending as much as they use to. Home Depot earned $0.66 per share in the second quarter, down from $0.71 during the same period last year. Revenue was 9.1% lower; sales to professional contractors were especially weak. More encouragingly, the company claimed "total customer transactions were positive for the first time in two years" and "We also had the largest gain in total market share that we have seen in five years."

In response to the weak retailing environment, which is especially debilitating to those tied to the ailing housing market, Home Depot consolidated operations and reduced capital outlays. The first step was to relinquish 50 planned stores in the U.S. and to close 15 existing stores. The second step was to exit the EXPO Design Center and a few other peripheral businesses. These actions led to asset impairment, severance, and other charges over $1.1 billion. While this will not thrust them to the level before the economic meltdown, it will help them build the confidence of their investors.

Home depot is looking at longterm stability not only for its investors but also for its reputation in the general public as well. Home depot is consistently paid dividends, this is a bright spot considering how many companies are just not paying out dividends due to the economic down turn. At its peak Home Depot paid out $.90 per share in 2008 this is a significant increase from 2000 when it paid out just $.11 per share. Home depot is maneuvering itself to become a long term investment for its share holders instead of “quick sell” stock every time it goes up a nickel.

As you can see from the chart above the Home depot has been attempting to... [continues]

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