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By Ashley M. Heher
Associated Press
Published on Friday, Jan 02, 2009
A year that started poorly got worse for the nation's home-improvement retailers.
But while shares of apparel, home furnishings and electronics retailers plunged as cash-strapped, out-of-work consumers pulled back on spending, shares of the nation's largest home-improvement chains — Home Depot Inc. and Lowe's Cos. Inc. — fell only marginally in 2008.
Home Depot's shares were down 14 percent for 2008, while Lowe's was off less than 5 percent, widely outperforming the 40 percent drop seen in the Dow Jones Total Market Index and the 39 percent in value lost by the Standard & Poor's 500.
''I think a lot of that is because the home-improvement retailers took their beating in 2006 and 2007,'' said Morningstar analyst Brady Lemos. ''They were the first ones to reflect the challenging housing market. So I think there was a lot of negativity built in and I think they met those lowered expectations.''
Home Depot, Lowe's and private competitors like Menard Inc. and True Value Co. were among the early victims of the housing bubble burst. As the decline gave way to a full-fledged recession, shoppers scaled back on everything from home-decor items to major kitchen overhauls.
That sent 2008 profits skidding 38 percent at Atlanta-based Home Depot and 15 percent at Mooresville, N.C.-based Lowe's through the first three quarters of 2008.
Amid the continued market slump, the retailers' efforts to keep inventory down resulted in better-than-expected gross margins. In September, Home Depot cut prices on as many as 1,200 items from trash bags to toilets in an effort to boost sales and win back customers. The discounts ranged between 5 percent and 50 percent.
But store closings also mounted and expansion plans were curtailed as the retailers attempted to cut costs.
A year that started poorly got worse for the nation's home-improvement retailers.
Get the full article here.
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