Despite Data Breach, Home Depot Posts Strong Q3 Results

The Home Depot has reported sales of $20.5 billion for the third quarter of fiscal 2014, ended November 2, a 5.4% increase from $19.4 billion in the third quarter of fiscal 2013. Comparable store sales for the third quarter of fiscal 2014 were up 5.2%, while comp sales for U.S. stores were up 5.8%.

Net earnings for the third quarter were $1.5 billion, or $1.15 per diluted share, compared with net earnings of $1.4 billion, or $0.95 per diluted share, for the same period of fiscal 2013.

The retailer noted that its third quarter of fiscal 2014 results reflect a pretax gain on sale of $100 million related to the sale of a portion of the company’s equity ownership in HD Supply Holdings, Inc. and pretax net expenses of $28 million related to the company’s data breach.

The retailer confirmed that it expected fiscal 2014 sales growth of approximately 4.8%. The company also confirmed that it expected fiscal 2014 diluted earnings per share to grow by 21% to approximately $4.54. This earnings-per-share guidance includes the benefit of the company’s year-to-date share repurchases of $5.74 billion and the company’s intent to repurchase an additional $1.26 billion of shares in the fourth quarter. The earnings-per-share guidance also includes an estimate of net breach-related costs of approximately $34 million for the year.

The company’s guidance does not include an accrual for other probable losses related to the breach that it stated cannot be estimated at this time. Costs related to the breach may include liabilities to payment card networks for reimbursements of credit card fraud and card reissuance costs; liabilities from current and future civil litigation, governmental investigations and enforcement proceedings; future expenses for legal, investigative and consulting fees; and incremental expenses and capital investments for remediation activities.

At the end of the third quarter, Home Depot operated a total of 2,266 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces and Mexico.