Home Depot lowers outlook
Home Depot executives presented a “retail update” to a group of analysts in New York today, warning that per-share profit is expected to drop 15 percent to 18 percent. Total sales for 2007 are expected to fall 1 percent to 2 percent, with negative comps in the mid-single digits.<
The sale of HD Supply, which is expected to close on Aug. 16, will depress earnings, company officials said. Volatile lumber prices and continued weakness in the housing market has also dampened revenues, especially in windows, roofing, flooring, appliances and water heaters.
Home Depot also announced the launch of a tender offer today to buy back 250 million shares for between $39 and $44 per share. The self-tender offer is set to expire Aug. 16.
“With the sale of HD Supply, we now have a laser focus on our retail business,” said Carol Tome, CFO and executive vp–corporate services.
Tome spoke of several retail initiatives including a revamping of Home Depot’s supply chain to centralize its distribution. The company plans to pilot the new model in Canada starting in the first quarter of 2008.
Home Depot is also changing its promotional strategy, according to chairman and CEO Frank Blake. “We’ve gotten into a pattern of [repetitive] promotions [and] we felt strongly that we needed to break that cycle,” Blake said. The retailer is now trying to offer consumers more targeted promotions with clearer value propositions, such as a current $99-per-room flooring installation offer.
Blake also addressed the difficulties faced by smaller vendors trying to get their products into Home Depot. To address this issue –- and keep up the flow of innovative products into its stores –- the company has instituted open-to-buy days. The first one, held last month in Atlanta, drew 290 vendors. Home Depot will hold a second open-to-buy day in August, Blake said.
Tembec cuts production at Ontario sawmill
Tembec, the Montreal-based international lumber producer, will take downtime at its Huntsville, Ontario, hardwood sawmill effective today.
The sawmill will be restarted on a one-shift basis July 16, with the second shift continuing to be idle for an indefinite period, the company said.
“This one-week shutdown and the subsequent indefinite shutdown of the second shift are due to a combination of factors, including overall market conditions for hardwood lumber, economic sawlog availability and the high value of the Canadian dollar,” said Dennis Rounsville, executive vp and president of Tembec’s Forest Products Group.
Tembec has yearly sales of about $3.5 billion, with approximately 9,000 employees worldwide.
Do it Best names new retail development vp
Do it Best Corp. has named Jay Brown to the post of vp-retail development.
Brown formerly served as vp-merchandising at the co-op, where he helped open two global buying offices in Asia. He also helped bring such programs to the co-op’s biannual markets, including the “Friday Night Sneak Peek” and “Power Tool University.”
Previously, Brown was senior general manager for paint manufacturer Valspar.
“Jay was instrumental in creating merchandising programs and services that helped our member-owners become more successful,” said Bob Taylor, Do it Best’s president and CEO. “He has done an outstanding job as vice president of merchandising and we know he will bring that same energy and enthusiasm to his new role with our field staff.”
Ft. Wayne, Ind.-based Do it Best serves approximately 4,100 member-owners in the United States and 45 foreign countries.