The decision didn't go over well with Wall Street. Although Nardelli said that the chain's decision was based on the fact that Home Depot was diversifying its business beyond consumer retail into the contractor supply market, some analysts felt that the move is an effort to hide disappointed results.
In fact, during the first quarter, Home Depot's sales of $21.5 billion were below Thomson Financial estimates of $21.53 billion. Nardelli said he was "disappointed" with retail sales in the quarter, particularly flooring and seasonal products such as lawn mowers, despite achieving average ticket growth of 4.3% to a record $60.75.
The chain reported first-quarter net earnings of $1.5 billion, or 70 cents per diluted share, compared to 57 cents per diluted share and net earnings of $1.2 billion reported for the same period in fiscal 2005.
During the quarter, Home Depot opened 23 new stores, including four relocations, with four new stores in Canada and two new stores in Mexico, bringing the total store count to 2,051.
Also during the quarter, the chain made two acquisitions: Home Decorators Collection (HDC), a catalog and online sales merchandiser of home décor; and Cox Lumber, the largest privately owned lumber company in Florida.
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