The housing and home improvement markets remained difficult in the first quarter; in fact, conditions worsened in many areas of the country.
– Frank Blake, CEO Home Depot
Home Depot (HD) reported another tough quarter before the open this morning: net income down 33% (excluding a big charge from store closings and the removal of new stores from the pipeline) on a 6.5% decrease in same store sales. In fact, things were even worse than that as a calendar shift added $536 million to sales (HD Earnings Release). Goldman says same store sales more likely fell somewhere between 9% and 9.4% – ouch.
Target (TGT) also reported a tough quarter: a 7.5% drop in net income on a 0.7% drop in same store sales – the first quarterly drop in same store sales for Target in a long, long time (TGT Earnings Release).
Add these reports to Lowe’s weak report yesterday, Nordstrom’s weak report last Thursday, JC Penney and Macy’s weak reports last Thursday as well and Jack In The Box’s weak report last Wednesday, and it all adds up to a consumer spending recession.
Disclosure: Top Gun is short Home Depot (HD) and has no position in Target (TGT), Nordstroms (JWN), JC Penney (JCP), Macys (M) or Jack in the Box (JBX).