10-QPeriod: Q1 FY2002

HOME DEPOT, INC. Quarterly Report for Q1 Ended Apr 29, 2001

Filed May 29, 2001For Securities:HD

Summary

The Home Depot, Inc. (HD) reported its first-quarter results for fiscal year 2001, ending April 29, 2001. The company demonstrated solid top-line growth, with net sales increasing by 9.8% to $12.2 billion compared to the prior year's first quarter. This growth was primarily driven by the opening of new stores, which offset a slight decline in comparable store-for-store sales. Operating income remained stable, while net earnings saw a modest increase of 0.5% to $632 million. Financially, the company reported a robust increase in cash flow from operations, bolstered by improved inventory management and extended payment terms. Capital expenditures increased due to planned store openings. The company also successfully issued $500 million in Senior Notes to support its capital expenditure programs and working capital needs. The balance sheet shows a significant increase in cash and cash equivalents, alongside a substantial rise in accounts payable, reflecting strong operational cash generation.

Key Highlights

  • 1Net sales grew 9.8% year-over-year to $12.2 billion for the first quarter.
  • 2Comparable store-for-store sales saw a slight decline of 3%, impacted by price deflation in certain product categories.
  • 3Gross profit margin improved to 30.0% from 29.5% due to lower merchandise costs and the addition of tool rental centers.
  • 4Selling and store operating expenses as a percentage of sales increased to 19.6% from 18.3%, driven by higher payroll, medical costs, and store occupancy expenses.
  • 5Net earnings for the quarter were $632 million, a slight increase of 0.5% from the prior year.
  • 6Cash flow from operations significantly increased to $2.2 billion, benefiting from inventory management and higher days payable outstanding.
  • 7The company issued $500 million in 5 3/8% Senior Notes due 2006 to fund capital expenditures and working capital.

Frequently Asked Questions

The primary driver for the increase in net sales was the opening of new stores. The company operated 1,178 stores at the end of the first quarter of fiscal 2001, compared to 971 at the end of the same period in the prior year. This expansion more than offset a slight decline in comparable store-for-store sales.

The company demonstrated improved inventory management, as indicated by a decrease in average inventory per store by approximately 7%. This, along with an increase in days payable outstanding, contributed to the significant rise in cash provided by operations.

The company plans to open 200 new stores and relocate 4 stores in fiscal 2001. Capital expenditures increased to support this growth. Management believes its current cash position, internally generated funds, and available credit facilities provide sufficient liquidity to fund these programs for the next several fiscal years. The company also issued $500 million in Senior Notes to help finance these initiatives.

Yes, on April 12, 2001, the company issued $500 million of 5 3/8% Senior Notes due April 1, 2006. Concurrently, the company repaid $754 million of commercial paper obligations. As of April 29, 2001, there were no borrowings outstanding under its commercial paper program.