Wednesday, August 15, 2007

Home Depot: Jumping ship

By many accounts, Robert Nardelli is a jerk. But he's a jerk with pretty goood timing. After being pushed out of Home Depot for failing to deliver a rising stock price despite strong growth in January, he landed a new gig as head of Chrysler. While no one can deny that this is a challenging job, expectations are low (anything other than bankruptcy will be considered a success) and being head of Home Depot right now is not much fun at all.

Today HD published its second quarter results, which where appropriately dismal. Sales fell 3% versus 2Q06 and the operating profit sank 12%. Things will only get uglier, as the second quarter is traditionally the strongest (sales rose only 2.8% versus the first quarter, compared to 21.3% in the same period last year). Needless to say, 2008 isn't looking good either. Besides, it's having trouble selling its wholesale building materials division to a group of private equity firms.

The not so bad news: its profit margin held up surprisingly well.