Home Depot Slump, Growing Tobacco
Home Depot books a 66 percent drop in quarterly profit, as the housing rut takes its toll. Imperial Tobacco looks to raise about $10 billion to fund the purchase of a rival. And 26 toilets for one house is too much, even in the hedge fund capital of the U
NEWS AT A GLANCE
Housing slump drags down Home Depot
Home Depot, the top home-improvement retailer, reported a 66 percent drop in quarterly profit, to $356 million. The results were weighed down by a charge for store closings and reduced future growth; without that charge, Home Depot booked a better-than-expected $697 million. (AP in Yahoo! Finance) Same-store sales were down 6.5 percent in the quarter, and overall sales fell 3.4 percent, to $17.9 billion. Earlier in the month, Home Depot said it is closing 15 stores and removing 50 more from its new store pipeline. “The housing and home improvement markets remained difficult in the first quarter,” said CEO Frank Blake. “In fact, conditions worsened in many areas of the country.” (CNNMoney.com)
Imperial Tobacco to sell $9.6 billion in new shares
Imperial Tobacco, the world’s No. 4 cigarette maker, reported a 44 percent drop in its first-half profit, to $496 million, and said it would raise $9.6 billion through a rights offer. The proceeds from the new shares, sold at a 43 percent discount, will help pay for Imperial’s $22 billion acquisition of Franco-Spanish rival Altadis. (MarketWatch) Imperial makes Davidoff and Lambert & Butler cigarettes; Altadis has Gauloises, Fortuna, Gitanes, and the world’s largest cigar maker. (Bloomberg) The rights offer will be the third-largest in British history. “The rights issue announcement eliminates uncertainty and should shift investor focus onto the operational merits of the Altadis deal,” said Credit Suisse analyst Rogerio Fujimori. (Reuters)
Staples posts slim profit
Top office supply chain Staples reported a 1.5 percent rise in quarterly profit, to $213.3 million, on a 6 percent rise in sales. The results, which matched analysts’ expectations, marked a return to growth for Staples, after two consecutive quarterly declines. Staples said it still expected a weak economy through the rest of the year, but reaffirmed its profit and sales targets. (AP in Yahoo! Finance) Yesterday, Staples launched a hostile $2.34 billion bid for Dutch office supply wholesaler Corporate Express NV, after Corporate Express turned down Staples’ sweetened offer. Given sluggish U.S. spending, analysts say the merger of a supplies retailer and wholesaler makes sense. (Reuters)
Drawing the line at 26 toilets
The residents of Greenwich, Conn., are used to great wealth and large houses, but Russian millionaire Valery Kogan’s plan to build a 54,000-square-foot mansion has crossed the line. Greenwhich, the hedge fund capital of the U.S., changed its zoning laws in 2001, and 175 people have signed a petition urging the city’s planning and zoning board to deny Kogan a building permit. Residents say the proposed house would dwarf the others in the neighborhood and clog traffic on the residential street. They note that the Kogans could host 300 people, park 12 cars in their driveway, and plan to install 26 toilets. “Who needs that many toilets?” asked Charles Lee, who lives across the street from Kogan. (Bloomberg)
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