Income Statments Home Depot, Lowe's and the Essay

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Income Statments

Home Depot, Lowe's and the British company Wolseley are three of the major companies in the building materials retailing industry. This paper will compare the revenues of these three companies over the past five years to gain a sense of how they have been performing. The prevailing economic conditions have been negative for the industry, since the industry is heavily dependent on the health of the housing market (Isidore, 2012). With only in recent months there having been signs of improvement in the U.S. housing market, none of these companies are expected to have enjoyed much success over the course of the past five years. This paper will, using income statement data, analyze how well each of these companies has weathered the economic downturn.

Home Depot

Home Depot earned revenues of $70.395 billion in FY 2012, an increase of 3.5% over the previous year. However, the current level of revenue is below that of FY2009 and FY2008, when the company earned $77.349 billion. Thus, while the company has increased its revenues in the past two years, Home Depot has not yet reached anywhere near its pre-recession revenue figures. The following graph illustrates how the revenue of Home Depot declined and then has started back on a slow growth trajectory.

Lowe's did not suffer in the recession nearly as much as Home Depot. In FY 2012, Lowe's saw its revneue increase 2.85% to $50.208 billion. The trajectory of revenue is not as dramatic for Lowe's as it was for Home Depot. The company basically saw reveues flatline for the past four years, prior to the increase last year. This difference could hihglight some operating differences between Lowe's and Home Depot. Lowe's may not operate in the more cyclical U.S. housing markets, or it might have a slightly different target market than Home Depot has. Regardless, the steadiness of the revenues at Lowe's is superior to that of Home Depot, and the company has now moved ahead of its FY2008 revenues, something Home Depot is nowhere near doing.
Wolsely operates mainly in the UK and Europe, with a much smaller presence in the North American market. However, Europe has also struggled in recent years with respect to its housing market and overall economic health. The UK market in particular has struggled, and has even re-entered recession in recent months (Moulds, 2012). Wolseley's revenue figures reflect this ongoing slowness. The company saw its revenues decline in the period from 2008-2010, but the rebound in 2011 has come undone. The revenues for 2012 declined by 1%, and this was the only company to see a decline in the last year. It is highly likely that the ongoing weakness in the United Kingdom is a major contributing factor in the inability of Wolseley to improve its revenue last year. Indeed, the company cites strength in the U.S. And Canada as a reason why it did not decline further last year with the challenges in Europe. The reveue for chart for Wolsley is as follows:

It should be noted that this represents the dollar figures, not the sterling figures, as it is easier to compare the performance of the companies using the same currency unit.

In addition to revenues, it is important to study the changes in profits for the different companies as well. After all, the objective of business, after earning revenue, is to convert that revenue into profit. Home Depot's net income has followed roughly the same course as its revenue. This was highest in 2008, when HD earned $4.395 billion in profit. However, profits decreased signifcanly with the onset of recession. However, profits have been on a steady increase since FY2009. Last year, Home Depot earned $3.883 billion in net income, up 16.3% from $3.338 billion in FY 2011. The company's net margin of 5.5% is close to where it was in FY2008 when it was 5.68%.

While Lowe's has held its revenues fairly steady, there has been more flucutation in the company's net income. Last year, net.....

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